EXHIBIT 1
This
Asset Purchase Agreement (the “Asset Purchase Agreement or the
“Agreement”), dated as of September 1, 2003, is made by and between Com Tech 21,
LLC, a Delaware Corporation with its principal offices located at Xxx Xxxxxx Xxxx Xxxxx,
Xxxxxxxxxxx, XX 00000 (“Purchaser”), and Moving Bytes, Inc., a Nevada
corporation with its principal offices located at 0000 Xxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxxx, XX 00000 (“Seller”).
RECITALS
WHEREAS,
Seller is engaged in the business of, among other things, the sale and provision of resold
long distance telecommunications services (the “Purchased Business”); and
WHEREAS,
Purchaser desires to purchase from Seller, and Seller desires to sell to Purchaser, all of
Seller’s right, title and interest in and to certain of the tangible and intangible
assets of Seller relating to or used in connection with the Purchased Business, together
with the goodwill associated with such assets, all as more fully described below, on the
terms and conditions set forth herein;
NOW,
THEREFORE, in consideration of the mutual promises contained herein, the parties
hereby agree as follows:
ARTICLE I —
PURCHASE AND SALE OF ASSETS
| 1.01 |
|
Sale and Purchase of Assets. Subject to, and upon the terms and conditions
contained herein, at the Closing (as hereinafter defined) Seller shall sell, transfer,
assign, convey and deliver to Purchaser, and Purchaser shall purchase, accept and acquire
from Seller, all of Seller’s right, title and interest in and to all of the tangible
and intangible assets of Seller relating to or used in connection with the Purchased
Business (collectively, the “Assets”), wherever such assets are located, and
whether in the possession of Seller, any of its suppliers or any of its distributors or
sales agents, together with the business as a going concern associated with such Purchased
Business, in each case free and clear of all Encumbrances (as hereinafter defined). |
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(a) |
Customer Accounts. All of Seller’s long distance customer accounts
relating to the Purchased Business (the “Customer Accounts”), and all
customer lists, books, records, files, data, computer data records, billing
files and similar items related to same. |
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(b) |
Customer Contracts. All of Seller’s rights under any agreements,
application forms, term contracts, letters of agency and all other contractual
instruments related to the Customer Accounts (collectively, the “Customer
Contracts”), including but not limited to Seller’s right to assert
claims and take other rightful actions in respect of breaches, defaults and
other violations of such Customer Contracts. |
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(c) |
Accounts Receivable. All of Seller’s accounts receivable and notes
receivable from customers for the Purchased Business which are ninety (90) days
or less from the most recent invoice date as of the Closing (as hereinafter
defined) (the “Accounts Receivable”), together with the proceeds
thereof. |
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(d) |
Assumed Contracts. All of Seller’s right, title and interest in and
to the contracts to be assumed by Purchaser (the “Assumed Contracts”)
which are listed on Schedule 1.01(d). |
|
(e) |
Toll-free Numbers and PIN Numbers. Any toll-free telephone numbers or
Personal Identification Numbers (PINs) used in the Purchased Business. |
|
(f) |
Books and Records. All financial, commercial, marketing and
administrative books and records of the Purchased Business in any form or
medium, including, computer databases, correspondence files, administrative
guidelines, marketing surveys, customer and supplier lists, sales and
promotional literature, mailing lists, quality control records and procedures,
research and development files and other records used in connection with or
relating to the Purchased Business as heretofore or presently conducted or
proposed to be conducted by Seller, together with copies of all accounting files
and records used in connection with or relating to the Purchased Business as
heretofore or presently being conducted or proposed to be conducted by Seller. |
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(g) |
Software. All computer software of Seller and all electronic databases
and other data processing and storage materials (regardless of format or medium)
of Seller and used in connection with the Purchased Business which are listed on
Schedule 3.01(i) hereto. |
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(h) |
Intangible Assets and Goodwill. All other tangible and intangible
materials, supplies, personal property and other assets of Seller used in or
relating to the Purchased Business, including, the goodwill of the Purchased
Business as a going concern. |
|
(i) |
Qwest ANI Transfer Promotion. All rights Seller has to receive financial
credit from Qwest Communications as a result of the Qwest ANI promotion (the
“Qwest Credit”). |
| 1.02 |
|
Seller’s Obligation to Transfer the Assets. Seller’s obligation to
transfer the Asset in accordance with Section 1.01 hereof shall be conditioned upon the
performance by Purchaser of its obligations under Section 2.02 hereof. |
| 1.03 |
|
Excluded Assets. Except as expressly provided in Section 1.01 hereof, Seller
shall not sell, transfer, assign, convey and deliver to Purchaser any assets of Seller,
whether relating to the Assets, the Purchased Business or otherwise, it being expressly
acknowledged and agreed by the parties that all such assets, whether existing as of the
Closing Date or arising thereafter, known or unknown, are and shall remain the assets of
Seller for all purposes. |
| 1.04 |
|
Assumed Liabilities. Purchaser hereby agrees to assume, as of the Closing Date and
to perform and pay when due, the following liabilities, obligations and costs associated
with the Purchased Business (collectively, the “Assumed Liabilities”),
including: |
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(a) |
all costs of Seller incurred for the billing period beginning September 1, 2003
and thereafter: |
|
i) |
associated with Purchaser’s use of Seller’s agreement with DCA
Services for Customer Account billing with the sole exception being in the event
that the use of DCA Services is required as a result of a lack of cooperation
from the Seller and/or DCA. Accordingly, Purchaser shall provide Seller with
five (5) days advance written notice to provide information necessary to
complete a conversion from DCA Services to its own billing vendor, in the event
that Seller and/or DCA does not provide the requested information within the
five day period Seller shall be responsible for all costs associated with |
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Purchaser’s
use of Seller’s agreement with DCA Services for Customer Account billing period for
the month of September, 2003 only; and |
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ii) |
associated with Purchaser’s use of Seller’s agreements with MCI
Communication’s Inc. and Qwest Communications Inc. and ECI Conference
Calling and Global Crossing, Inc, for Customer Account provisioning and
services; and |
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iii) |
associated with telecommunication’s taxes which occur as a result of the
provisioning of services to Customers Accounts; and |
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iv) |
all liabilities and obligations of Seller arising under the Assumed Contracts;
provided, however, that in no event shall Purchaser assume any liability under
the Assumed Contracts arising out of any breach or default thereunder by Seller
prior to the Closing Date (including, without limitation, any event occurring
prior to the Closing Date, that, with the passage of time or the giving of
notice, or both, would become a breach or default) under any Assumed Contract;
and further provided that with respect to any Assumed Contract, only those
liabilities and obligations explicitly disclosed in the text of such Assumed
Contract delivered by the Seller to the Purchaser; and |
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v) |
all liabilities and obligations of Seller under any commissioned sales agent or
wholesale promotion including without limitation the Qwest ANI Promotion. |
| 1.05 |
|
Excluded Liabilities. Except as expressly provided in Section 1.04 hereof,
neither Purchaser nor Seller shall assume any liabilities or obligations of (or claimed
through) the other party, whether relating to the Assets, the Purchased Business or
otherwise, it being expressly acknowledged and agreed by the parties that all such
liabilities and obligations, and any claims or disputes relating thereto, whether existing
as of the Closing Date or arising thereafter, fixed or contingent, known or unknown,
asserted or unasserted (collectively, the “Excluded Liabilities”), are
and shall remain the liabilities and obligations of the respective party for all purposes.
The Excluded Liabilities shall include, without limitation, any and all taxes, debts,
liabilities, obligations, contracts, commitments, claims, disputes, actions, lawsuits,
judgments, assessments, fines, penalties, levies, surcharges, losses, deficiencies and
damages not specifically set forth herein. |
ARTICLE II —
CONSIDERATION; CLOSING
| 2.01 |
|
Purchase Price. Subject to the terms and conditions of this Agreement, the purchase
price (the “Purchase Price”) payable for the Assets shall be Six Hundred
Thousand Dollars ($600,000) (the “Customer Base Purchase Price”) plus 90% of the
aggregate face value of the Accounts Receivable (the “Accounts Receivable Purchase
Price”) payable in accordance with Section 2.02 hereof plus a true up for payments
received and applied to the Accounts Receivable in excess of 90% of the aggregate face
value as set forth in Section 2.02(e). |
| 2.02 |
|
Payments.
Purchaser shall pay Seller in four (4) tranches (each a "Tranche" and jointly and
severally the "Payments") as follows: |
|
(a) |
Upon Closing, Purchaser shall pay to Seller, or on behalf of Seller to the
entities set forth below (jointly and severally each a “Payee”), Three
Hundred Thousand dollars ($300,000) (the “First Tranche”) as follows: |
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i) |
one hundred thousand dollars ($100,000) to remove the lien on the Purchased
Business and Assets held by Xxxxxx Xxxxxx (the “Karwat Release”), a
copy of which security |
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agreement
creating a lien on the Purchased Business and Assets is attached as Exhibit 2.02(a)(i)
hereto, to be paid directly by Purchaser with evidence of such payment to be provided to
Seller; and |
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ii) |
forty nine thousand five hundred fifty three dollars and four cents ($49,553.04)
to Qwest Communications for amounts due for the month of July 2003 as set forth
on Seller’s Qwest Communications invoice dated July 31, 2003, a copy of
which is attached as Exhibit 2.02(a)(ii) hereto, to be paid directly by
Purchaser with evidence of such payment to be provided to Seller; and |
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iii) |
seventy two thousand five hundred ninety one dollars and ninety one cents
($72,591.91) to MCI Communications for amounts due for the month of July 2003 as
set forth on Seller’s MCI Communications invoice dated July 31, 2003, a
copy of which is attached as Exhibit 2.02(a)(iii) hereto, to be paid directly by
Purchaser with evidence of such payment to be provided to Seller; and |
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iv) |
nineteen thousand eight hundred forty two dollars and ninety three cents
($19,842.93) to pay amounts due to Seller’s commissioned sales agents as of
October 1, 2003 for July 2003 sales a schedule of which is attached as Schedule
2.02(a)(iv) hereto, the amount to be paid directly by Purchaser with evidence of
such payments to be provided to Seller; and |
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v) |
fifty eight thousand twelve dollars and twelve cents ($58,012.12) to be paid
directly to Seller; and |
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(b) |
On or before September 10, 2003, Purchaser shall pay to Seller (the “Second
Tranche”) in an amount equal to 90% of the face value of the aggregate
Accounts Receivable; and |
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(c) |
On or before September 30, 2003, Purchaser shall pay to, or on behalf of, Seller
(the “Third Tranche”) in an amount to be determined as follows: |
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i) |
an amount equal to the Qwest Communications invoice for the month of August 2003
as set forth on Seller’s Qwest Communications invoice dated August 31,
2003, a copy of which shall be provided to Purchaser prior to required payment
therefore, to be paid directly by Purchaser with evidence of such payment to be
provided to Seller; and |
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ii) |
an amount equal to the MCI Communications invoice for the month of August 2003
as set forth on Seller’s MCI Communications invoice dated August 31, 2003,
a copy of which shall be provided to Purchaser prior to required payment
therefore, to be paid directly by Purchaser with evidence of such payment to be
provided to Seller; and |
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iii) |
an amount equal to fifty six thousand four hundred sixty six dollars and
seventy-three cents ($56,466.73) to USAC for Sellers past due obligation on
delinquent Universal Service Fund (“USF”) taxes a copy of which is
attached as Exhibit 2.02(c)(iii) hereto, the amount to be paid directly by
Purchaser with evidence of such payment to be provided to Seller, except that,
if prior to September 30, 2003 Seller shall satisfy payment of the USF taxes and
provide evidence of such to Purchaser, then Purchaser shall not pay USAC under
this Section 2.02(c)(iii). |
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iv) |
an amount equal to commissions due Seller’s commissioned sales agents for
August 2003 sales, a schedule of which shall be provided to Purchaser prior to
required payment therefore, |
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to
be paid directly by Purchaser with evidence of such payments to be
provided to Seller; and |
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(d) |
On or before September 30, 2003, Purchaser shall pay Seller the fourth Tranche
(the “Fourth Tranche”) in the amount equal to the Purchase Price less
the First Tranche amount less the Third Tranche amount. |
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(e) |
In the event that Purchaser collects in excess of 90% of the aggregate face
value of the Accounts Receivable acquired in accordance with Section 2.02(b), to
be calculated ninety (90) days from the closing of this Agreement (the
“True-up Date”), Seller shall be paid additional compensation equal to
50% of the dollars collected in excess of the 90% up to a maximum of 2.5%.
Purchaser shall provide Seller an accounting of all collections relating to the
Accounts Receivable within 10 days of the True-up Date. |
| 2.03 |
|
Time and Place. The closing of the transactions contemplated hereby (the
“Closing”) shall occur on September 1, 2003 (the “Closing
Date”), or at such other time as shall be mutually agreed to in writing by the
parties hereto. The Closing shall commence at 12:01 a.m., Pacific Standard Time, on the
Closing Date with respect to the transfer of Customer Accounts and proceed promptly to
conclusion. |
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(a) |
Deliveries by Seller. Seller shall deliver to Purchaser at the Closing
the following: |
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i) |
a Xxxx of Sale and Assumption Agreement in the form attached hereto as Exhibit
2.04(a)(i), together with such other assignments and instruments of transfer as
Purchaser and its counsel shall deem necessary or appropriate to vest and
confirm in Purchaser good and marketable title to the Assets; and |
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ii) |
a Master Letter of Agency assignment in the form attached hereto as Exhibit
2.04(a)(ii); and |
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iii) |
an Accounts Receivable assignment in the form attached hereto as Exhibit
2.04(a)(iii); and |
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iv) |
a certificate, in the form attached hereto as Exhibit 2.04(a)(iv), dated as of
the Closing Date and executed by an appropriate officer of the Seller, to the
effect that (A) each of the representations and warranties of the Seller made
herein is true and correct in all material respects on the Closing Date as
though such representations and warranties were made on such date, and (B) the
Seller have performed and complied in all material respects with all covenants
and obligations under this Agreement which are required to be performed or
complied with by such party on or prior to the Closing Date; and |
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v) |
counterparts of each of the documents and agreements that are to be executed by
Seller hereunder, duly executed by Seller. |
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(b) |
Deliveries by Purchaser. Purchaser shall deliver to Seller at the Closing
the following: |
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i) |
evidence that payment of the First Tranche amounts to be paid to each Payee
shall be made upon Closing; and |
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ii) |
a Security Agreement in the form attached hereto as Exhibit 2.04(b)(ii); and |
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iii) |
a certificate, in the form attached as Exhibit 2.04(b)(iii) hereto dated as of
the Closing Date and executed by an appropriate officer of the Purchaser, to the
effect that (A) each of the representations and warranties of the Purchaser made
herein is true and correct in all material respects on the Closing Date as
though such representations and warranties were made on such date, and (B) the
Purchaser has performed and complied in all material respects with all covenants
and obligations under this Agreement which are required to be performed or
complied with by such party on or prior to the Closing Date; and |
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iv) |
counterparts of each of the documents and agreements that are to be executed by
Purchaser hereunder, duly executed by Purchaser. |
ARTICLE III
— REPRESENTATIONS AND WARRANTIES OF SELLER
| 3.01 |
|
Seller
hereby jointly and severally represents and warrant to Purchaser: |
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(a) |
Organization and Good Standing. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the state of Nevada, and
has all requisite corporate power and authority to own, lease and operate the
properties and assets it now owns, leases or operates and to carry on its
business as presently conducted. Seller is duly qualified and licensed to do
business and is in good standing in each jurisdiction where the nature of its
business makes such qualification necessary, which jurisdictions are listed on
Schedule 3.01(a) hereto, except where the failure to be qualified or licensed
would not have a material adverse effect on the Purchased Business or Assets (a
“Material Adverse Effect”). No material portion of the
Purchased Business is owned or conducted by any entity other than the Seller. |
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(b) |
Authorization and Validity. Seller has all requisite corporate and other
power and authority to execute, deliver and perform its obligations under this
Agreement. The execution, delivery and performance of this Agreement and the
other documents executed by the Seller hereunder (the “Ancillary
Agreements”), and the consummation of the transactions contemplated hereby
and thereby, have been duly authorized by all necessary corporate action by
Seller, and no other corporate action on the part of Seller is necessary to
authorize the execution and delivery of this Agreement or the Ancillary
Agreements or the performance of this Agreement or the Ancillary Agreements by
Seller and the consummation of the transactions contemplated hereby and thereby.
This Agreement and each Ancillary Agreement has been duly executed and delivered
on behalf of Seller and constitutes the legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except that the
enforceability of this Agreement and the Ancillary Agreements is subject to
bankruptcy, insolvency, reorganization and similar laws of general applicability
relating to or affecting creditors’ rights and limitations on the
availability of the remedy of specific performance and other equitable relief;
and |
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(c) |
No Shareholder Consent. No consent of the shareholders of Seller is
required in order to authorize such Seller to consummate the transactions
contemplated under this Agreement and the Ancillary Agreements. |
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(d) |
Consents and Approvals; No Violations. The execution, delivery and
performance by the Seller of this Agreement and the Ancillary Agreements, and
the consummation of the transactions contemplated hereby and thereby, will not: |
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i) |
violate or conflict with any provision of the Certificate of Incorporation or
By-Laws of Seller; or |
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ii) |
subject to delivery of the Karwat Release, violate or conflict with, result in
the breach of, constitute an event of default (or an event which, with the lapse
of time, or the giving of notice, or both, would constitute an event of default)
under, or result in the creation in any party of any right to accelerate,
modify, cancel or terminate, any contract or other instrument, to which Seller
is a party or by which Seller or any of the Assets is bound, or result in the
creation of any encumbrance or other right of any third party upon any of the
Assets; or |
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iii) |
to the best of Seller’s knowledge violate or conflict with any law, rule,
regulation, ordinance, code, judgment, order, writ, injunction or decree of any
court or any governmental body or agency thereof of any jurisdiction to which
any of the Seller or any of the Assets may be subject; or |
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iv) |
to the best of Seller’s knowledge require any registration, declaration or
filing with, or permit, license, exemption, order, franchise, approval, consent
or other authorization of, or the giving of notice to, any governmental or
regulatory body, agency or authority in the United States or any other
jurisdiction in which the Purchased Business is conducted. |
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(e) |
Absence of Undisclosed Liabilities. Except as set forth in Section 1.04
hereof Seller has no liabilities or obligations of any nature, whether absolute
or contingent, accrued or unaccrued, or known or unknown related to the Assets
or the Purchased Business and for which Purchaser shall be liable after the
Closing. |
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(f) |
No Claims or Litigation. Except as disclosed in Schedule 3.01(f) hereto,
there are no suits, actions, claims, proceedings (including, without limitation,
arbitral and administrative proceedings) or governmental investigations pending
or, to the knowledge of Seller, threatened against or contemplated against the
Seller (or any of their affiliates, including directors, officers, employees or
agents) relating to or affecting, directly or indirectly, the Assets or the
Purchased Business. There are no such suits, actions, proceedings, claims or
investigations pending or, to the knowledge of Seller, threatened challenging
the validity or propriety of, or otherwise involving, this Agreement or the
transactions contemplated hereby. There is no judgment, order, injunction,
decree or award issued by any court, arbitrator, governmental body or agency
thereof to which any of the Seller is a party and which would materially affect
the Assets or the Purchased Business or by which any of the Assets are bound,
which is unsatisfied or which requires continuing compliance therewith by the
Seller. |
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(g) |
Taxes. Except as disclosed in Schedule 3.01(g) hereto all Tax returns and
reports relating to the Assets and the Purchased Business required to be filed
by Seller on or before the date hereof have been duly and timely filed and all
such returns and reports are complete and correct and all Taxes, assessments,
fees and other governmental charges imposed on or with respect to the Assets
which have become due and payable through and including the date hereof have
been paid in a due and timely manner or have been accrued for in the books and
records of Seller. Seller have paid or will pay when due any and all Taxes,
assessments, fees and other governmental charges arising with respect to periods
through the Closing Date which are imposed on or with respect to the Assets and
the Purchased Business and as of the date hereof, (a) Seller has not agreed to
the extension of limitation period for any Tax, (b) there is no Tax audit
pending against Seller, (c) there are no Tax liens on any of the Assets (other
than any lien for current Taxes not yet due and payable), and (d) to best of
Seller’s knowledge, there is no basis for the assertion of any such Tax
liens. |
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(h) |
Title to Assets and Related Matters. Except as set forth in Schedule
3.01(h) hereto, Seller have good and marketable title to the Assets, free and
clear of any and all mortgages, pledges, security interests, liens, charges,
equities, claims, conditional sales contracts, restrictions, reservations,
options, rights and other encumbrances of any nature whatsoever (collectively,
“Encumbrances”), except for Permitted Liens. For purposes of
this Agreement, “Permitted Liens” shall mean (a) statutory
liens for Taxes not yet delinquent provided such liens are discharged through
the timely filing of Tax returns, and (b) other liens of an immaterial nature or
amount which do not impair or interfere with the use of any property or assets
of Seller (including the Assets) in any material respect. As of the Closing
Date, Seller shall convey to Purchaser, and Purchaser shall acquire, good and
marketable title to the Assets, free and clear of any Encumbrances, except for
Encumbrances set forth in Schedule 3.01(h) hereto and Permitted Liens. The
Assets constitute all tangible and intangible assets relating |
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to,
used in, held for use in or necessary for the conduct of the Purchased Business as
currently conducted. |
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(i) |
Computer Software. Schedule 3.01(i) hereto sets forth a complete and
correct list of all computer systems and software (other than noncustomized,
commercially available computer programs) which are owned by Seller and used in
the Purchased Business (the “Proprietary Software”). Title to
all computer programs constituting the Proprietary Software will be assigned to
Purchaser free and clear of all Encumbrances at the Closing. Except as set forth
in Schedule 3.01(i) hereto, Seller represents and warrants that Seller,
with respect to each item of Proprietary Software, is the owner of the
Proprietary Software and that, to the best of Seller’s knowledge, the
Proprietary Software does not infringe any copyright, trade secret or trademark
of any other person, and that Seller has the right to assign the Proprietary
Software to Purchaser free and clear of any Encumbrances. |
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(j) |
Contracts. Except as set forth in Schedule 3.01(j) hereto or other
Schedules to this Agreement, Seller is not a party to, nor subject to: |
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i) |
any written contract, arrangement or understanding, or series of related written
contracts, arrangements or understandings, that is related to the Purchased
Business and involves annual expenditures or receipts of more than $50,000; or |
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ii) |
any lease of personal property that is material to the Purchased Business; or |
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iii) |
any lease of real property that is material to the Purchased Business; or |
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iv) |
any license agreement currently in effect which grants rights with respect to
any of the Assets that is material to the Purchased Business; or |
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v) |
any written contract, arrangement or understanding currently in effect not made
in the ordinary course of business that is material to the Purchased Business;
or |
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vi) |
any note, bond, indenture, credit facility, mortgage, pledge, security agreement
or other contract, arrangement or understanding relating to or evidencing
indebtedness for money borrowed, or a security interest, pledge or mortgage in
the Assets; or |
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vii) |
any express warranty, indemnity or guaranty issued by any of the Seller that is
material to the Purchased Business; or |
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viii) |
any written contract, arrangement or understanding granting to any person the
right to use any of the Assets that is material to the Purchased Business; or |
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ix) |
any written contract, arrangement or understanding restricting any Seller’s
right to engage in any business activity or compete with any business that is
material to the Purchased Business; or |
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x) |
any written contract, arrangement or understanding with a Related Party that is
material to the Purchased Business; or |
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xi) |
any other agreement that is material to the Purchased Business, including, but
not limited to, joint venture agreements, purchase and sale agreements and
collective bargaining, union, consulting and employment contracts; or |
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xii) |
any outstanding commitment or obligation to enter into any contract or
arrangement of the nature described in subsections (i) through (xi) of this
subsection 3.01(j). |
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(k) |
Assumed Contracts. Schedule 1.01(d) hereto lists those contracts which
are to be assumed by Purchaser at the Closing pursuant to this Agreement (the
“Assumed Contracts”). Except as set forth in Schedule 3.01(j)
hereto, each Assumed Contract is in full force and effect, and |
| |
i) |
neither Seller nor (to the knowledge of Seller) any other party is in material
default under any such Assumed Contract; and |
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ii) |
no event has occurred which constitutes, or with the lapse of time or the giving
of notice or both would constitute, a default by Seller or (to the best if
Seller’s knowledge) a default by any other party under such Assumed
Contract; and |
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iii) |
to the knowledge of Seller, there are no disputes or disagreements between any
Seller and any other party with respect to any such Assumed Contract; and |
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iv) |
Seller is not currently renegotiating any of its Assumed contracts, nor is any
of the Seller paying liquidated damages in lieu of performing any of its Assumed
contracts. |
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(l) |
Customers. Schedule 3.01(l) hereto sets forth a complete and correct list
of the twenty (20) largest Customers Accounts in terms of revenue recognized
(after taking into account any discounts or rebates granted to such customers)
showing the total amount billed by Seller to each such Customer Account in
connection with the Purchased Business for the period ended July 31, 2003; and |
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i) |
except as set forth and described in Schedule 3.01(l) hereto, since August 1,
2003, Seller has not received any written notice or other written communication
terminating or materially reducing, or setting forth an intention to terminate
or materially reduce in the future, or otherwise reflecting a material adverse
change in, the business relationship between such Customer Account and Seller;
and |
|
ii) |
except as disclosed on Schedule 3.01(h) hereto, the Customer Accounts are all
owned by Seller free and clear of any Encumbrances and is of merchantable
quality. |
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(m) |
Suppliers. Schedule 3.01(m) hereto sets forth a complete and correct list
and description of all supply contracts, agreements and understandings relating
to the Purchased Business between Seller and all other suppliers of goods and
services who are currently providing goods or services to the Purchased
Business. Except as set forth in Schedule 3.01(m) hereto, no supplier has given
Seller any notice (written or oral) terminating, suspending or reducing, or
setting forth an intention to terminate, suspend or reduce in the future, or
otherwise reflecting an adverse change in, the business relationship between
such supplier and Seller and, to the knowledge of Seller, there has not been any
adverse change in the business relationship of Seller with any such supplier.
Seller has not received notice from the supplier of any product or service which
is material to the Purchased Business as to the possible shortage or other
disruption in the supply of such key product or service. |
|
(n) |
Ability to Conduct the Purchased Business. There is no agreement,
arrangement or understanding with any person, or any judgment, order, writ,
injunction or decree of any court or governmental body or agency thereof of any
jurisdiction, that restricts Seller’s conduct of the Purchased Business as
of the date hereof. Seller has in force, and are in compliance with the terms
and conditions of, all material licenses, permits, exemptions, consents,
authorizations and approvals of governmental authorities or agencies thereof
used or required under any existing Federal, state, local or foreign statute,
law, ordinance, rule or regulation (or any proposed statute, law, ordinance,
rule or regulation known to any of the Seller) in connection with the Purchased
Business. |
|
(o) |
Compliance with Applicable Law and Regulations. To the best of
Seller’s knowledge, neither the Assets nor Seller’s operation of the
Purchased Business as presently conducted are in material violation of any
applicable foreign or domestic law, rule, regulation, ordinance, code, judgment,
order, injunction, writ or decree of any Federal, state, local or foreign court
or governmental body or agency thereof, or trade organization, to which Seller
may be subject, including, without limitation, any rules or regulations of the
Federal Communications Commission and similar regulatory bodies of any foreign
country, state or locality. Except as set forth in Schedule 3.01(o) hereto, no
claims are currently pending against any of the Seller, and none of the Seller
has received any notice alleging any such violation, nor, to the knowledge of
Seller, is there any inquiry, investigation or proceeding relating thereto. |
|
(p) |
Accounts Receivable. Except as set forth on Schedule 3.01(p) hereto, all
accounts receivable of Seller relating to the Purchased Business: |
| |
i) |
arose from bona fide sales of goods or services in the ordinary course of
business and consistent with past practice, and |
|
ii) |
are owned by the Seller free and clear of any security interest or other
Encumbrance, and are accurately reflected with respect to accounts receivable
arising prior to August 31, 2003, in all material respects in the books and
records of the Purchased Business. |
|
(q) |
No Transactions. There are no agreements, arrangements or understandings
involving the purchase, sale or other disposition of the Purchased Business,
whether through a sale of assets, a sale of the capital stock of any of the
Seller, a merger or otherwise, other than this Agreement. |
|
(r) |
Reliance. The foregoing representations and warranties are made by Seller
with the knowledge and expectation that Purchaser is placing complete reliance
thereon in entering |
11
| |
into, and performing its obligations under, this Agreement, and thesame
shall not be affected in any respect whatsoever by any investigation heretofore or
hereafter conducted by or on behalf of Purchaser whether in contemplation of this
Agreement, the consummation of the transactions contemplated hereby or otherwise. |
|
(s) |
Disclosure. No representation and warranty of Seller contained in this
Agreement (including, without limitation, the Schedules hereto), nor any other
statement, schedule, certificate or other document delivered or to be delivered
by Seller to Purchaser pursuant hereto or in connection with the transactions
contemplated by this Agreement, contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary in
order to make the statements made herein or therein, in the light of the
circumstances in which they were made, not misleading. |
ARTICLE IV
— REPRESENTATIONS AND WARRANTIES OF PURCHASER
| 4.01 |
|
Purchaser
hereby makes the following representations and warranties to Seller: |
| |
(a) |
|
Organization
and Good Standing of Purchaser. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority
to own, lease and operate its property and assets and to carry on its
business as presently conducted. |
| |
(b) |
|
Authority;
Binding Effect; Performance. Purchaser has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Security Agreement. The
execution, delivery and performance of this Agreement and the
Security Agreement by Purchaser, and the consummation of the
transactions contemplated hereby, have been duly authorized by all
necessary corporate action by Purchaser, and no other corporate action on
the part of Purchaser is necessary to authorize the execution and
delivery of this Agreement and the Security Agreement or the
performance of this Agreement and the Security Agreement by Purchaser
and the consummation of the transactions contemplated hereby. This
Agreement and the Security Agreement have been duly executed and
delivered on behalf of Purchaser and constitute legal, valid and
binding obligations of Purchaser, enforceable against Purchaser in
accordance with their terms. The security interest created by the
Security Agreement in the collateral described therein shall be a
first priority security interest securing payment of amounts due
under Section 2.02 hereto. |
| |
(c) |
|
Consents
and Approvals; No Violations. The execution, delivery and
performance of this Agreement by Purchaser, and the consummation of
the transactions contemplated hereby, will not: |
| |
|
i) |
|
violate
or conflict with any provision of the Certificate of Incorporation or
By-Laws of Purchaser; or |
| |
|
ii) |
|
violate
or conflict with, result in the breach of or constitute an event of
default (or an event which, with the lapse of time, or the giving of
notice, or both, would constitute an event of default) under, or
result in the creation in any party of the right to accelerate,
modify, cancel or terminate, any contract or other instrument to
which Purchaser is a party or by which Purchaser or any of its assets
is bound, or result in the creation of any encumbrance or other right
of any third party upon any of the assets of Purchaser; or |
12
| |
|
iii) |
|
violate
or conflict with any law, rule, regulation, ordinance, code, judgment,
order, writ, injunction or decree of any court or any governmental
body or agency thereof of any jurisdiction to which Purchaser or any
of its assets is subject; or |
| 4.02 |
|
No Shareholder Consent. No consent of the shareholders of Purchaser is required in
order to authorize such Purchaser to consummate the transactions contemplated under this
Agreement and the Security Agreement. |
| 4.03 |
|
Claims or Litigation. There are no suits, actions, proceedings, claims or
investigations pending or, to the knowledge of Purchaser, threatened against Purchaser
challenging the validity or propriety of, or otherwise involving, this Agreement or the
transactions contemplated hereby. |
| 4.04 |
|
Finder's Fee. Purchaser has not incurred any obligation for any finder's, broker's or agent's
fee in connection with this Agreement or the transactions contemplated hereby. |
| 4.05 |
|
Reliance. The foregoing representations and warranties are made by Purchaser with
the knowledge and expectation that Seller is placing complete reliance thereon in entering
into, and performing its obligations under, this Agreement, and the same shall not be
affected in any respect whatsoever by any investigation heretofore conducted by or on
behalf of Seller whether in contemplation of this Agreement or otherwise. |
| 4.06 |
|
Disclosure. No representation and warranty of Purchaser contained in this Agreement
(including, without limitation, the Schedules hereto), nor any other statement, schedule,
certificate or other document delivered or to be delivered by Purchaser to Seller pursuant
hereto or in connection with the transactions contemplated by this Agreement, contains or
will contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements made herein or therein, in the
light of the circumstances in which they were made, not misleading. |
ARTICLE V —
MUTUAL COVENANTS
| 5.01 |
|
Consummation of Agreement. Each of the parties agrees to perform its obligations
hereunder and to use its reasonable best efforts to cause the consummation of the
transactions contemplated by this Agreement in accordance with, and subject to, the terms
and conditions of this Agreement. |
| 5.02 |
|
Access After Closing. Purchaser and Seller agree to retain all accounting
(including, without limitation, accountants’ work papers), business, financial and
Tax records in its possession: |
| |
(a) |
|
relating
to the Purchased Business in existence on the Closing Date and either sold
to Purchaser hereunder or retained by Seller thereafter, as the case may
be; or |
| |
(b) |
|
coming
into existence after the Closing Date which relate to the Purchased
Business for pre-Closing periods, in each case for a period of three years
from the Closing Date, provided that, after such date, each party shall
make reasonable arrangements for the other party’s continued access
to such records. In addition, from and after the Closing Date, Purchaser
and Seller agree that, subject to receiving appropriate assurances of
confidentiality and restrictions on use, they will not unreasonably
withhold access by the other party and its attorneys, accountants and
other representatives (after reasonable notice and during normal business
hours), to such personnel, books, records and documents relating to the
Purchased Business as the other party may reasonably deem necessary to
properly prepare for, file, prove, answer, |
13
| |
prosecute
and/or defend any financial statements, Tax return, filing, audit, judicial or
administrative proceeding, protest, claim, suit, inquiry or other proceeding. |
| 5.03 |
|
Material Change. Prior to the Closing Date, Seller and Purchaser shall promptly
inform the other party in writing of any material adverse change in the condition of the
Purchased Business. Notwithstanding the disclosure of any such material adverse change,
the parties shall not be relieved of any liability for, nor shall the providing of such
information be deemed a waiver of, the breach of any representation or warranty of any
party contained in this Agreement. |
| 5.04 |
|
Notice of Developments Breach. Each party will give prompt written notice to the
other party of any material adverse development causing a breach of any of its own
representations, warranties or covenants hereunder. No disclosure by any party pursuant to
this Section 5.04, however, shall be deemed to amend or supplement the Disclosure Schedule
or to prevent or cure any misrepresentation, breach of warranty or breach of covenant. As
used herein, “Disclosure Schedule” means the Schedules attached hereto and
referred to herein. |
ARTICLE VI —
SELLER’S COVENANTS
| 6.01 |
|
Business Operations. From the date hereof through the Closing Date Seller shall
operate the Purchased Business only in the ordinary course, will not introduce any new
method of management or operation and shall use their commercially reasonable efforts to
preserve the Purchased Business intact, to retain its present customers and suppliers so
that they will be available to Purchaser after the Closing and to cause consummation of
the transactions contemplated by this Agreement in accordance with its terms and
conditions. Seller shall not take any action that might materially impair the Purchased
Business or Assets without the prior consent of Purchaser. Without limitation of the
generality of the foregoing, Seller will not engage in any practice, take any action, or
enter into any transaction in violation of this Agreement. Seller will keep the Purchased
Business and Assets substantially intact, including its present operations, good will, and
its relationships with suppliers, distributors, and customers. |
| 6.02 |
|
Mail and Communications. Seller shall promptly remit to Purchaser any mail or other
communications related to Customer Accounts received by Seller related to the Purchased
Business or the Assets and any invoices received by Seller relating to the Assumed
Liabilities which are received by Seller from and after the Closing Date and, subject to
Purchaser’s prior payment to Seller of the Second Tranche, Seller shall promptly
remit to Purchaser any payments, complete with a valid endorsement to Purchaser, received
by Seller related to the Purchased Business or the Assets, from and after the Closing
Date. Upon receipt of the Second Tranche Seller shall immediately submit a Change of
Address request with the United States Postal Service requiring all items received in the
P.O. Box be forwarded to Purchaser at the address set forth herein. Seller shall provide
evidence of such request within one (1) business day following payment of the Second
Tranche. |
| 6.03 |
|
Access; Due Diligence. Seller shall permit Purchaser and its authorized
representatives full access to, and make available for inspection, all of the Assets and
Purchased Business, including Seller’s employees, customers and suppliers, and
furnish Purchaser all documents, records and information with respect to the affairs of
Seller as Purchaser and its representatives may reasonably request, all for the sole
purpose of permitting Purchaser to become familiar with the business and assets and
liabilities of Seller. |
14
| 6.04 |
|
Approvals
of Third Parties. Seller shall undertake to obtain the following on behalf of Purchaser: |
| |
(a) |
|
the
Karwat Release; and |
| |
(b) |
|
assignment
of Seller’s MCI Communication’s carrier agreement to Purchaser;
and |
| |
(c) |
|
transfer
of the Customer Accounts from Seller’s accounts to Purchasers account
in the accounting systems of MCI Communications and Qwest Communications;
and |
| |
(d) |
|
assignment
of the Qwest Credit. |
| 6.05 |
|
Tax Returns and Payments. Seller shall be solely responsible for, and shall make
timely payment of, all sales, use, transfer, excise, documentary, real property transfer
gains, value added and other similar Taxes payable in connection with this Agreement or
arising from the sale, transfer, assignment, delivery or conveyance of the Assets
hereunder or of any assets thereunder. Seller shall prepare and file all necessary tax
returns and other filings in connection with the Taxes referred to in this Section 6.05,
shall provide all information, documents and affidavits necessary for any such filings,
and shall pay all fees and charges incurred in connection therewith. Seller shall
indemnify, defend and hold harmless on an after-tax basis Purchaser against and from any
and all liability, cost, loss or expense to Purchaser arising out of the imposition of any
Taxes referred to in this Section 6.05. |
| 6.06 |
|
Further Assurances. Seller shall, at any time and from time to time after the
Closing Date, upon the request and at the expense of Purchaser but without further
consideration, do, execute, acknowledge, deliver and file, or shall cause to be done,
executed, acknowledged, delivered and filed, all such further acts, deeds, transfers,
conveyances, assignments or assurances as may be reasonably requested by Purchaser to
transfer, convey and assign to Purchaser’s possession and use, the Assets and the
Purchased Business and to comply with all applicable legal requirements, including,
without limitation, making any required governmental filings, in connection with the
purchase of the Assets and the Purchased Business by Purchaser. Without limiting the
foregoing, upon the request and at the expense of Purchaser, at any time during the period
commencing on the Closing Date and ending on the third anniversary of the Closing Date,
Seller shall take all steps necessary to assign all material licenses, permits,
exemptions, consents, authorizations or approvals to Purchaser in cases where such
assignment is permitted. |
| 6.07 |
|
Post-Closing Funds. Subject to Seller’s receipt of the Second Tranche, Seller
covenant and agree that any cash, cash proceeds or other funds received by Seller from and
after the Closing Date which constitute Assets or proceeds of Assets (including, without
limitation, funds deposited into bank accounts of Seller after the Closing Date) will be
promptly remitted by Seller to Purchaser, free and clear of all encumbrances of any nature
whatsoever and, pending such remittance, shall be held in trust for the benefit of
Purchaser. |
| 6.08 |
|
Non-Compete and Non-Solicitation. Seller, its employees, directors, officers,
partners, consultants, or representatives shall not directly or indirectly solicit or
engage any Customer Account for a period of three (3) years following the date of this
Agreement to offer like services currently provided by Purchaser. Seller also agrees not
to directly or indirectly engage or participate in any business offering like services
currently provided by Purchaser either for its own account or for that of another company
or entity within the continental United States for a period of two (2) years following the
date of this Agreement. |
15
| 6.09 |
|
Use of Trade Name and Logo. Seller agrees to allow Purchaser to continue to xxxx
the services utilizing the existing trade name(s) and/or logo(s) for the three billing
cycles immediately following the closing and ending on September 30th, October
31st and November 30th as necessary. |
ARTICLE VII —
PURCHASER’S COVENANTS
| 7.01 |
|
Regulatory Approval. Purchaser shall be solely responsible for obtaining all state
and federal regulatory approvals which may be required to effect the sale, transfer,
assignment, delivery or conveyance of the Purchased Business hereunder. Purchaser shall
prepare and file all necessary applications and notices and other filings in connection
with obtaining regulatory approvals. Purchaser shall provide all information, documents
and affidavits necessary for any such filings, and shall pay all fees and charges incurred
in connection therewith. Purchaser shall indemnify, defend and hold harmless Seller
against and from any and all liability, cost, loss or expense to Purchaser arising out of
a failure to obtain any regulatory approval necessary to effect the sale, transfer,
assignment, delivery or conveyance of the Purchased Business hereunder. |
| 7.02 |
|
Payments. Purchaser shall promptly make all Payments which are paid directly to
Seller by wire transfer to Seller’s bank account as follows: |
| |
Xxxxx Fargo Bank
ABA# 000000000
To the Credit of Moving Bytes, Inc.
Account# 4945-085884
|
ARTICLE VIII
— PURCHASER’S CONDITIONS PRECEDENT
| 8.01 |
|
Except as may be waived in writing by Purchaser in Purchaser’s sole discretion, the
obligations of Purchaser hereunder are subject to the fulfillment at or prior to the
Closing of each of the following conditions: |
| |
(a) |
|
Representations
and Warranties. The representations and warranties of Seller contained
herein shall be true and correct in all material respects as of the
Closing as though such representations and warranties were made on such
date, subject to any changes contemplated by this Agreement. |
| |
(b) |
|
Performance.
Seller shall have performed and complied in all material respects with all
covenants or conditions required by this Agreement to be performed and
complied with by them on or prior to the Closing. |
| |
(c) |
|
Deliveries.
Seller shall have delivered each of the documents required pursuant to
Section 2.05(a) hereof in each case in form and substance satisfactory to
Purchaser and its counsel. |
| |
(d) |
|
Proceedings.
No action, proceeding or order by any court or governmental body or agency
shall have been threatened in writing, asserted, instituted or entered to
restrain, enjoins or, otherwise prohibits the carrying out of the
transactions contemplated by this Agreement. |
| |
(e) |
|
Call
Detail Records. Seller shall instruct all carriers to submit all call
detail records to Purchaser Xxx Xxxxxx Xxxx Xxxxx, Xxxxxxxxxxx, XX 00000 or
as otherwise instructed by Purchaser immediately upon closing regardless
if the assignment and assumption of the wholesale contracts contemplated
herein are completed or not. |
16
| |
(f) |
|
Remit
Address. Seller shall instruct its billing vendor to change payment
remit address for all Customer Account bills to ComTech21 Xxx Xxxxxx Xxxx
Xxxxx Xxxxxxxxxxx, XX 00000. |
ARTICLE IX
— SELLER’S CONDITIONS PRECEDENT
| 9.01 |
|
Except as may be waived in writing by Seller in Seller’s sole discretion, the
obligations of Seller hereunder are subject to fulfillment at or prior to the Closing of
each of the following conditions: |
| |
(a) |
|
Representations
and Warranties. The representations and warranties of Purchaser
contained herein shall be true and correct in all material respects as of
the Closing as though such representations and warranties were made on such
date, subject to any changes contemplated by this Agreement. |
| |
(b) |
|
Performance.
Purchaser shall have performed and complied in all material respects with
all covenants or conditions required by this Agreement to be performed and
complied with by them on or prior to the Closing. |
| |
(c) |
|
Deliveries.
Purchaser shall have delivered each of the documents required pursuant to
Section 2.05(b) hereof in each case in form and substance satisfactory to
Purchaser and its counsel. |
| |
(d) |
|
Proceedings.
No action, proceeding or order by any court or governmental body or agency
shall have been threatened in writing, asserted, instituted or entered to
restrain, enjoins or otherwise prohibits the carrying out of the
transactions contemplated by this Agreement. |
| |
(e) |
|
Payment.
Purchaser shall provide evidence that the First Tranche pursuant to
Section 2.02 hereof shall be made upon closing. |
ARTICLE X —
INDEMNIFICATION
| 10.01 |
|
Seller’s Indemnity. In and amount not to exceed the Customer Base Purchase
Price, and subject to the terms and conditions of this Article X, Seller agrees to
indemnify, defend and hold Purchaser and its officers, directors, shareholders, employees,
agents, attorneys, affiliates or successors in interest or transferees of any of the
foregoing persons harmless from and against and to promptly pay all losses, claims,
obligations, demands, assessments, penalties, liabilities, suits, fines, deficiencies,
interest, costs, actual or punitive damages, reasonable attorneys’ fees and expenses
(whether contingent, fixed or unfixed, liquidated or unliquidated or otherwise)
(collectively, “Damages”), asserted against or incurred by Purchaser by reason
of or resulting from a misrepresentation, breach or nonfulfillment of, or any failure to
perform by the Seller any representation, warranty or covenant contained herein or in any
agreement executed pursuant hereto and any liabilities other than Assumed Liabilities
including slamming whereby a Customer was acquired by Seller without the express consent
of the responsible party. |
| 10.02 |
|
Purchaser’s Indemnity. In an amount not to exceed the Purchase Price, and
subject to the terms and conditions of this Article X, Purchaser hereby agrees to
indemnify, defend and hold Seller and their officers, directors, shareholders, employees,
agents, attorneys, affiliates or successors in |
17
| |
interest
or transferees of any of the foregoing persons harmless from and against and to promptly pay all Damages asserted against or incurred by reason of or
resulting from: |
| |
(a) |
|
a
breach or misrepresentation, nonfulfillment of, or failure to perform by
Purchaser of any representation, warranty or covenant contained herein or
in any agreement executed pursuant hereto; and |
| |
(b) |
|
the
failure of Purchaser to pay, perform and discharge amounts due under Section
and 2.02 hereof. |
| 10.03 |
|
Conditions of Indemnification. The respective obligations and liabilities of Seller
and Purchaser (the “indemnifying party”) to the other (the “party to be
indemnified”) under Sections 10.01 and 10.02 hereof with respect to claims resulting
from the assertion of liability by third parties shall be subject to the following terms
and conditions: |
| |
(a) |
|
promptly
after receipt of notice of commencement of any action evidenced by service
of process or other legal pleading, or with reasonable promptness after
the assertion in writing of any claim by a third party, the party to be
indemnified shall give the indemnifying party written notice thereof
together with a copy of such claim, process or other legal pleading. The
indemnifying party shall have the right to join in the defense,
settlement, adjustment or compromise thereof by representatives of its own
choosing and at its own expense; provided, however, that the party to be
indemnified may participate in the defense, settlement, adjustment or
compromise with counsel of its own choice and at its own expense; and |
| |
(b) |
|
in
the event that the indemnifying party, by the 30th day after receipt of
notice of any such claim (or, if earlier, by the 10th day preceding the
day on which an answer or other pleading must be served in order to
prevent judgment by default in favor of the person asserting such claim),
does not elect to join in the defense, settlement, adjustment or
compromise of such claim, or, in the reasonable judgment of the party to
be indemnified, the defense is being handled in such a manner that the
indemnified party’s reputation or future business prospects will be
damaged, the party to be indemnified will (upon further notice to the
indemnifying party) have the right to undertake the defense, adjustment,
compromise or settlement of such claim on behalf of and for the account
and risk of the indemnifying party and at the indemnifying party’s
expense, subject to the right of the indemnifying party to participate in
the defense of such claims at any time prior to settlement, adjustment,
compromise or final determination thereof; and |
| |
(c) |
|
anything
in this Section 10.03 to the contrary notwithstanding, the indemnifying
party shall not settle any claim without the consent of the party to be
indemnified unless such settlement involves only the payment of money and
the claimant provides to the party to be indemnified an unconditional
release from all liability in respect of such claim and does not include a
statement as to admission of fault, culpability or a failure to act on
behalf of a party to be indemnified. If the settlement of the claim
involves more than the payment of money, the indemnifying party shall not
settle the claim without the prior consent of the party to be indemnified,
which consent shall not be unreasonably withheld; and |
| |
(d) |
|
an
indemnified party’s failure to give timely notice or to furnish the
indemnifying party or parties with any relevant data and documents in
connection with any claim shall not constitute a defense (in part or in
whole) to any claim for indemnification by such party, except and only to
the extent that such failure shall result in any material prejudice to the |
18
| |
indemnifying
party or parties. If so desired by any indemnifying party or parties, such party or
parties may, by giving the indemnified party or parties written notice in which the
indemnifying party or parties acknowledge that such claim is properly subject to
indemnification hereunder, elect, at such party’s or parties’ sole expense, to
assume control of the defense, settlement, adjustment or compromise of any claim,
provided that such indemnifying party shall obtain the consent of all indemnified parties
before entering into any settlement, adjustment or compromise of such claim, or ceasing
to defend against such claim, if as a result thereof, or pursuant thereto, there would be
imposed on an indemnified party any liability or obligation not covered by the
indemnification obligations of the indemnifying parties under this Agreement (including,
without limitation, any injunctive relief or other remedy); and |
| |
(e) |
|
the
parties hereby acknowledge and agree that, notwithstanding the procedures
established in subsection 10.03(a) above, Purchaser shall be entitled to
make payments to persons, and to treat such payments as claims hereunder
without complying with the procedures set forth in subsection 10.03(a), to
the extent that such payments relate to liabilities and obligations owed
to persons or entities with whom or with which Purchaser has an ongoing
business relationship, where such liabilities and obligations relate to
the Purchased Business but do not constitute Assumed Liabilities, where
Purchaser in good faith has reasonably determined that such amounts
continue to be due and payable and where Purchaser has notified Seller of
such claim and Seller have not discharged such liability or obligation
within fifteen (15) days of receipt of such notice; and |
| |
(f) |
|
the
party to be indemnified and the indemnifying party will each cooperate with
all reasonable requests of the other. |
| 10.04 |
|
Survival. The rights of the parties to seek indemnification under this Article X
shall terminate on the following dates, except as to those claims with respect to which
notice shall have been duly given prior to the relevant termination date: |
| |
(a) |
|
in
the case of claims for indemnification relating to Taxes and other
governmental assessments and charges of any nature whatsoever (including,
without limitation, all claims brought under subsection 10.01, the date of
expiration of the relevant statute of limitations, including any
extensions thereof; and |
| |
(b) |
|
in
the case of claims for indemnification arising from the failure or alleged
failure on the part of Seller or Purchaser to comply with the requirements
of any bulk sales, fraudulent conveyance or other law for the protection
of creditors, the date of expiration of the relevant statute of
limitations, including any extensions thereof; and |
| |
(c) |
|
in
the case of all other claims for indemnification arising under this
Agreement, on the first anniversary of the date hereof. |
| 10.05 |
|
Threshold. The parties shall not have any liability pursuant to this Article X, or
any other provision of this Agreement, unless and until the aggregate amount of Damages
accrued pursuant to this Agreement is greater than or equal to $2,500 (the “Liability
Threshold”); provided, however, that once the aggregate amount of Damages against a
party shall equal or exceed the Liability Threshold, such party shall thereafter be liable
on a dollar-for-dollar basis for the full amount of all Damages initially excluded under
the Liability Threshold. |
19
| 10.06 |
|
Remedies
Not Exclusive. The remedies provided in this Article X shall not be exclusive of
any other rights or remedies available by one party against the other, either at
law or in equity. |
| 10.07 |
|
Remedies Not Affected by Investigation. The representations, warranties, covenants
and undertakings of Seller and Purchaser hereunder are made with the knowledge that Seller
and Purchaser are respectively placing complete reliance thereon in entering into this
Agreement, and the same shall not be affected or deemed waived by reason of any
investigation made or knowledge gained by or on behalf of Seller or Purchaser (including,
without limitation, by of their respective advisors, consultants or representatives or
otherwise) prior to the Closing or by reason of the fact that Seller or Purchaser or any
of their respective advisors, consultants or representatives knew or should have known
that any such representation or warranty is or might be inaccurate, or that any covenant
or undertaking has been or might have been breached, at or prior to the Closing, and no
claims by Seller or Purchaser with respect thereto shall be waived or otherwise affected
as a result of such knowledge on the part of Seller or Purchaser (or any of their
respective advisors, consultants or representatives), and neither Seller nor Purchase
shall raise any such matter as a defense. |
ARTICLE XI —
MISCELLANEOUS
| 11.01 |
|
Amendment. This Agreement may be amended, modified or supplemented only by an
instrument in writing executed by the party against which enforcement of the amendment,
modification or supplement is sought which execution shall not be unreasonably withheld. |
| 11.02 |
|
Assignment.
Neither this Agreement nor any right created hereby shall be assignable by either party
hereto. |
| 11.03 |
|
Notice. Any notice or communication must be in writing and given by depositing the
same in the United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the same in
person, by telecopier or by expedited courier. Such notice shall be deemed received on the
date on which it is hand-delivered or telecopied (with confirmation of receipt thereof by
the addressee),on the next business day by expedited courier, or on the third business day
following the date on which it is so mailed. For purposes of notice, the addresses of the
parties shall be: |
| |
if
to Seller: |
Moving Bytes, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
000-000-0000
|
| |
if to Purchaser: |
ComTech21, Inc.
Xxx Xxxxxx Xxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx
Fax: 000-000-0000 |
| |
Any
party may change its address for notice by written notice given to the other parties. |
20
| 11.04 |
|
Mutual Confidentiality. The parties shall keep this Agreement and its terms
confidential, but any party may make such disclosures after the Closing as
it reasonably considers are required by law. In the event that the transactions
contemplated by this Agreement are not consummated for any reason
whatsoever, the parties hereto agree not to disclose or use any confidential
information they may have concerning the affairs of the other parties, except for
information which is required by law to be disclosed. For purposes of this
Section 11.04, confidential information includes, but is not limited to:
customer lists and files, prices and costs, business and financial records,
surveys, reports, plans, proposals, financial information, information
relating to personnel contracts, stock ownership, liabilities and litigation. Should
the transactions contemplated hereby not be consummated, nothing contained
in this Section shall be construed to prohibit the parties hereto from
operating a business in competition with each other, except with respect to
Customer Accounts. Purchaser and the Seller shall consult with each
other in releasing information concerning this Agreement and the
transactions contemplated hereby. Each of the parties to this Agreement
shall furnish to the other drafts of all releases prior to publication. |
| 11.05 |
|
Entire Agreement. This Agreement and the exhibits hereto supersede all prior agreements and
understandings relating to the subject matter hereof, except that the
obligations of any party under any agreement executed pursuant to this Agreement
shall not be affected by this Section. |
| 11.06 |
|
Costs, Expenses and Legal Fees. Whether or not the transactions contemplated hereby are
consummated, each party hereto shall bear its own costs and expenses
(including attorneys' fees), except that each party hereto agrees to pay the costs
and expenses, including reasonable attorneys' fees, incurred by the other
parties in successfully: |
| |
(a) |
|
enforcing
any of the terms of this Agreement; or |
| |
(b) |
|
proving
that the other parties breached any of the terms of this Agreement in any material
respect. |
| 11.07 |
|
Severability.
If any provision of this Agreement is held to be illegal, invalid or unenforceable
under present or future laws effective during the term hereof, such
provision shall be fully severable and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision never
comprised a part hereof; and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom. Furthermore, in lieu of such illegal,
invalid or unenforceable provision, there shall be added automatically as
part of this Agreement, a provision as similar in its terms to such illegal,
invalid or unenforceable provision as may be possible and be legal, valid and
enforceable. |
| 11.08 |
|
Survival of Representations, Warranties and Covenants. The representations, warranties and
covenants contained herein shall survive the Closing for one (1) year and all
statements contained in any certificate, exhibit or other instrument delivered
by or on behalf of Seller or Purchaser pursuant to this Agreement shall
be deemed to have been representations and warranties by Seller or
Purchaser, as the case may be, and shall survive the Closing and any investigation made
by any party hereto or on its behalf for one (1) year. The provisions of Section
11.04 shall survive the Closing for three (3) years. |
| 11.09 |
|
Captions.
The captions in this Agreement are for convenience of reference only and shall not
limit or otherwise affect any of the terms or provisions hereof. |
21
| 11.10 |
|
Counterparts.
This Agreement may be executed in counterparts and by facsimile, each of which shall
be deemed an original, and all of which together shall constitute one and the
same instrument. |
| 11.11 |
|
Bulk
Transfer Laws. Prior to the Closing, the parties hereto will comply in all respects
with any applicable bulk transfer laws, including any notice required to be
made to the Internal Revenue Service or any state tax authority. |
| 11.12 |
|
Number
and Gender. Whenever the context requires, references in this Agreement to the
singular number shall include the plural, the plural number shall include the
singular and words denoting gender shall include the masculine, feminine and
neuter. |
| 11.13 |
|
Governing
Law. The Parties hereby agree that this Agreement shall be governed and construed in
accordance with the laws of the State of Connecticut, and the State of
Connecticut, County of New Haven, shall be the jurisdiction for the resolution of
all disputes hereunder. |
ARTICLE XII — TERMINATION
| 12.01 |
|
Termination
of Agreement. Certain of the parties may terminate this Agreement as provided below: |
| |
(a) |
|
Purchaser
and Seller may terminate this Agreement by mutual written consent at any time prior to
the Closing Date; or |
| |
(b) |
|
Purchaser
may terminate this Agreement by giving written notice to the Seller at any time prior to
the Closing: |
| |
|
i) |
|
in
the event the Seller has breached any representation, warranty, or covenant contained
in this Agreement in any material respect, the Purchaser has notified
the Seller of the breach, and the breach has continued without cure for a period
of fifteen (15) days after the breach; or |
| |
|
ii) |
|
if
the Closing shall not have occurred on or before September 1, 2003, by reason of the
failure of any condition precedent under Article VIII hereof
(unless the failure results primarily from the Purchaser itself breaching any
representation, warranty, or covenant contained in this Agreement); and |
| |
(c) |
|
Seller
may terminate this Agreement by giving written notice to Purchaser at any time prior to
the Closing: |
| |
|
i) |
|
in
the event that the Purchaser has breached any material representation, warranty or
covenant contained in this Agreement in any material respect, Seller
have notified Purchaser of the breach and the breach has continued without cure for
a period of fifteen (15) days after the notice of breach; or |
22
| |
|
ii) |
|
if
the Closing shall not have occurred on or before September 1, 2003, by reason of the
failure of any condition precedent under Article IX hereof (unless the
failure results from any of the Seller breaching any representation, warranty or
covenant contained in this Agreement). |
| 12.02 |
|
Effect
of Termination. If any party terminates this Agreement pursuant to Section 12.01
above, all rights and obligations of the parties hereunder shall terminate
without any liability of any party to any other party, except for any liability for
breach of contract of any party then in breach. |
IN WITNESS WHEREOF, the parties
hereto, intending to be legally bound hereby, have executed this Agreement as of
the date first written above.
Moving Bytes, Inc.
By:
/s/ Xxxx Xxxxx
Xxxx Xxxxx, President |
ComTech21, LLC
By:
|
Moving Bytes, Inc.
By:
/s/ J. Xxxx Mustad
J. Xxxx Mustad, CEO of Moving Bytes Inc. |
|
23
| Schedule
1.01(d) |
Assumed Contracts {commissioned sales agent agreements, MCI agreement) |
| Schedule
2.02(a)(iv) |
Commissioned sales agents amounts payable as of September 1, 2003 |
| Schedule
3.01(a) |
Authorized Jurisdictions {California} |
| Schedule
3.01(f) |
Litigation and Claims {Karwat Security Agreement} |
| Schedule
3.01(g) |
Taxes {USF} |
| Schedule
3.01(h) |
Encumbrances {Karwat Security Agreement} |
| Schedule
3.01(i) |
Computer Software (sales agent commission module) |
| Schedule
3.01(j) |
Contracts Disclosure {none} |
| Schedule
3.01(l) |
Top 20 Customers |
| Schedule
3.01(m) |
Supplier List (DCA, MCI, Qwest, Ernst and Young, Global Crossing, ECI
Conferencing) |
| Schedule
3.01(o) |
Federal, State, Local and Foreign Taxes (USF) |
| Schedule
3.01(p) |
Accounts Receivable Exceptions {Karwat Security Agreement} |
| Exhibit
2.02(a)(i) |
Karwat Security Agreement |
| Exhibit
2.02(a)(ii) |
Qwest Invoices Dated July 31, 2003 |
| Exhibit
2.02(a)(iii) |
MCI Invoices Dated July 31, 2003 |
| Exhibit
2.02(a)(iv) |
Commissioned Sales Agent Payables for July 2003 |
| Exhibit
2.02(c)(iii) |
USF Tax Xxxx |
| Exhibit
2.04(a)(i) |
Xxxx of Sale and Assignment |
| Exhibit
2.04(a)(ii) |
Master Letter of Agency |
| Exhibit
2.04(a)(iii) |
Accounts Receivable Assignment |
| Exhibit
2.04(a)(iv) |
Certificate of Seller |
| Exhibit
2.04(b)(ii) |
Purchaser's Security Agreement |
| Exhibit
2.04(b)(iii) |
Certificate of Purchaser |
24
