BINDING LETTER OF INTENT
Exhibit
99.1
Modavox,
Inc. (“Modavox”) and World Talk Radio, LLC, doing business as Voice America,
with a principle place of business at 0000 X. Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxx
XX 00000 (“WTR”), as of December 31, 2009 (the “LOI Date”), agree to enter into
a transaction (“The Transaction”) under which WTR will immediately acquire
certain designated assets of Modavox, which assets have been used by Modavox in
the course of operating its “iRadio” Internet Radio division (“iRadio
Division”). For purposes of this Letter of Intent, Modavox and WTR
are referred to collectively as the “Parties.”
Although
the Parties intend for this Letter of Intent to be a binding contractual
commitment of each Party according to its terms, it is the intent of the Parties
that the Transaction will be memorialized in greater detail, consistent with
these terms, in an Asset Purchase Agreement (the “Agreement”) between the
Parties to be executed within ten (10) business days following the date of this
Letter of Intent:
PARTIES
WILL INDEMNIFY, DEFEND AND HOLD HARMLESS EACH OTHER, ITS AFFILIATES, OFFICERS,
DIRECTORS, EMPLOYEES, CONSULTANTS AND AGENTS FROM ANY AND ALL THIRD PARTY
CLAIMS, LIABILITY, DAMAGES AND/OR COSTS (INCLUDING, BUT NOT LIMITED TO,
ATTORNEYS FEES) ARISING FROM ITS BREACH OF ANY WARRANTY, REPRESENTATION OR
COVENANT UNDER THIS AGREEMENT. PARTIES WILL PROMPTLY NOTIFY EACH
OTHER OF ANY AND ALL SUCH CLAIMS AND WILL REASONABLY COOPERATE WITH ONE ANOTHER
WITH THE DEFENSE AND/OR SETTLEMENT THEREOF, WHICH DEFENSE AND/OR SETTLEMENT
SHALL BE CONTROLLED BY PARTIES, PROVIDED THAT, IF ANY SETTLEMENT REQUIRES AN
AFFIRMATIVE OBLIGATION OF, RESULTS IN ANY ONGOING LIABILITY TO OR PREJUDICES OR
DETRIMENTALLY IMPACTS THE OTHER IN ANY WAY AND SUCH OBLIGATION, LIABILITY,
PREJUDICE OR IMPACT CAN REASONABLY BE EXPECTED TO BE MATERIAL, THEN SUCH
SETTLEMENT SHALL REQUIRE SUCH ADVERSLEY AFFECTED XXXXX’X WRITTEN
CONSENT (NOT TO BE UNREASONABLY WITHHELD OR DELAYED) AND PARTIES MAY HAVE THEIR
OWN COUNSEL IN ATTENDANCE AT ALL PROCEEDINGS AND SUBSTANTIVE NEGOTIATIONS
RELATING TO SUCH CLAIM.
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1.
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Identification of Transferred
Assets. In exchange for the Transaction Consideration
payable or creditable to Modavox as identified herein, Modavox agrees to
transfer to WTR the tangible and intangible assets identified in Exhibit A
hereto (“Transferred Assets”), which assets relate to historic and current
operation of Modavox’s iRadio Division and which assets are being
transferred to WTR for the purpose of transferring to WTR the business
operations of Modavox’s iRadio Division. Only assets
specifically identified as Transferred Assets will transfer to WTR as part
of the Transaction.
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2.
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Assignment of
Contracts. WTR will inform current clients, partners and
vendors of Modavox’s iRadio Division about the Transaction and the
transfer of business operations from Modavox to WTR, and WTR will be
responsible for obtaining written assignments to WTR of any agreements
currently between Modavox and such clients/partners/vendors, transferring
the rights and duties of Modavox to WTR. Such agreement
assignments will be completed within ten (10) business days after the
Parties’ execution of the Agreement. WTR understands the historical
revenue generated from these clients. Current client contracts are
described in Exhibit B,
attached hereto (“Transferred Clients”), current partner agreements are
described in Exhibit C,
attached hereto (“Transferred Partners”) and current vendor agreements are
described in Exhibit D
hereto (“Transferred Vendors”).
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3.
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Assumption of iRadio Division
Employees. In addition to the Transferred Liabilities
identified in Section 4 below, WTR agrees to hire certain individuals who
were employed by Modavox’s iRadio Division prior to the LOI Date, a list
of whom is attached hereto as Exhibit E
(“Transferred
Employees”), and to otherwise assume all liabilities associated
with the ongoing employment of such Transferred Employees commencing as of
the LOI Date (including recognizing the accrued/unused vacation of
Transferred Employees; provided that Modavox will reimburse WTR for any
legally mandated paid-out accrued vacation costs for any Transferred
Employee who terminates employment with WTR within ten (10) business days
after the LOI Date).
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4.
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Transaction Consideration;
Assumption of Designated Operational Liabilities. As
consideration for the Transferred Assets identified hereunder, WTR agrees
to pay to Modavox certain revenue sharing payments, and, further, WTR
agrees to assume full responsibility for certain designated operational
liabilities commencing on the LOI Date, as
follows:
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Revenue Sharing
Fee. For as long as WTR is in the business of providing
Internet-based radio services, WTR will pay to Modavox a commission based
on WTR gross revenue according to the following graded schedule, which
schedule is intended to be discounted for two calendar quarters to assist
WTR with start-up costs:
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(i)
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January
1, 2010 through March 31, 2010 – 5% of Gross
Revenue
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(ii)
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April
1, 2010 through June 30, 2010 – 10% of Gross
Revenue
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(iii)
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July
1, 2010 through June 30, 2015 – 15% of Gross
Revenue
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(iii)
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July
1, 2016 and after – 5% of Gross
Revenue
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Upon ten
(10) days’ prior written notice to WTR and no more than one (1) time per
calendar quarter, Modavox may audit WTR’s books and records to ensure WTR’s
compliance with its obligations, including its payment obligations, under this
Agreement. To the extent such an audit indicates underpayment of the
Revenue Sharing Fee, WTR will promptly remit such underpayment (and applicable
late payment interest) to Modavox and, if the underpayment exceeds five percent
(5%) of the previously paid fees, WTR will pay Modavox’s reasonable costs and
expenses of such audit/review.
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Assumption of
Operational Liabilities. As of the LOI Date, WTR agrees
to assume the Transferred Employees liabilities, if any, described in
Section 3 above in addition to the ongoing operational expenses identified
in Exhibit
F hereto (“Transferred
Liabilities”).
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5.
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Ongoing
Liabilities. The Parties agree that any and all
liabilities accrued by WTR commencing on the LOI date, including with
respect to any agreements to be transferred to WTR as described in Section
2 of this Letter of Intent or with respect to any Transferred Employees,
will be the sole responsibility of
WTR.
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6.
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Transition
Assistance. Modavox has/will assist WTR with the
assumption of certain business operations by providing the following the
Transition Assistance:
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Set
up of Hostway Account for WTR. Account to host primary domain, and
email.
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Set
up of Xxxxxxxxxxxx.xxx domain
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DNS
setup for xxxxxxxxxxxx.xxx. Includes various subdomains used by Radiopilot
Platform
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Server
migration of two Windows servers
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Transfer
of domains:
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1.
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xxxxxxxxxxx.xxx
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2.
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xxxxxxx0xxxxx.xxx
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3.
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xxxxxxxx.xxx
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4.
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xxxxxxxxxx.xxx
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5.
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xxxxxxxx.xxx
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Transfer
of iRadio Blog to Radiopilot Server
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Installation
of SQL server on Radiopilot Application
Server
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Support
on integrating player and Live Stream with new CDN
(ongoing)
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Personnel
training on Radiopilot Platform
administration
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Modavox
agrees to leave one Windows server active until January 15, 2010, to
assist WTR with client transition (archives
server)
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Updating
and migrating of download script which is used with the MP3 download
functionality of Radiopilot
Platform
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7.
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Costs. Each
Party will pay its own legal, accounting and other costs related to the
Transaction. It is agreed, however, that Modavox will not be responsible
for any outstanding liabilities, debt, taxes, or any other expenses of
Augme related to its past business transactions or transfer of assets to
Modavox, nor for any expenses associated with WRT’s review and approval of
the terms of this agreement.
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8.
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Definitive
Agreement. Modavox and WRT agree that it is in their
mutual best interests to create a definitive agreement based upon this
Letter of Intent as soon as practicable, but in no event later than ten
(10) business days after the LOI
Date.
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9.
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Publicity. Modavox
and WTR agree to not publicly disclose this Letter of Intent of any
matters related thereto without the consent of the other party except
where required by the Securities and Exchange Commission, other
departments, or agencies.
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THE
PARTIES EACH WARRANT AND REPRESENT TO THE OTHER THAT (I) IT IS DULY ORGANIZED,
VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF ITS STATE OF FORMATION;
(II) IT HAS THE FULL POWER TO ENTER INTO THIS AGREEMENT AND TO GRANT THE RIGHTS
SET FORTH HEREIN; (III) THIS AGREEMENT, WHEN EXECUTED AND DELIVERED BY SUCH
PARTY, WILL BE THE LEGAL, VALID AND BINDING OBLIGATION OF SUCH PARTY ENFORCEABLE
AGAINST IT IN ACCORDANCE WITH ITS TERMS; AND (IV) THE EXECUTION, DELIVERY AND
PERFORMANCE OF THIS AGREEMENT BY SUCH PARTY DOES NOT CONFLICT WITH, OR
CONSTITUTE A BREACH OR DEFAULT UNDER, ANY PROVISION OF ANY AGREEMENT, CONTRACT,
COMMITMENT OR INSTRUMENT TO WHICH IT IS A PARTY.
This
Letter of Intent is entered into on December 31, 2009 by:
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Modavox,
Inc.
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World
Talk Radio LLC (Voice America)
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000
Xxxx 00xx
Xxxxxx
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0000
X. Xxxxxxxxxx Xxxxx, Xxxxx 000
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0xx
Xxxxx
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Xxxxx,
XX 00000
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Xxx
Xxxx, XX 00000
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/s/ Xxxx Xxxxxxxx
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/s/ Xxxx Xxxxxxx
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Xxxx
Xxxxxxxx
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Xxxx
Xxxxxxx
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-3-
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Its CEO
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Its
______________________
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Exhibit
A
Transferred
Assets
-4-
Exhibit
B
Transferred
Clients
All
clients of (and client agreements with) Modavox’s iRadio Division as of December
31, 2009, will be transferred from Modavox to WTR as described in Section 2 of
the LOI, a list of which will be included in the Asset Purchase Agreement to be
prepared following execution of this LOI.
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Exhibit
C
Transferred
Partners
All
partners of (and partner agreements with) Modavox’s iRadio Division as of
December 31, 2009, will be transferred from Modavox to WTR as described in
Section 2 of the LOI, a list of which will be included in the Asset Purchase
Agreement to be prepared following execution of this LOI.
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Exhibit
D
Transferred
Vendors
All
vendors of (and vendor agreements with) Modavox’s iRadio Division as of December
31, 2009, will be transferred from Modavox to WTR as described in Section 2 of
the LOI, a list of which will be included in the Asset Purchase Agreement to be
prepared following execution of this LOI.
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Exhibit
E
Transferred
Employees
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Exhibit
F
Transferred
Liabilities
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