EXHIBIT 10.1
STOCK EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
This Stock Exchange Agreement and Plan of Reorganization
("Agreement"), dated as of May 31, 2002, is made by and between Universal
Information Services, Inc., a California corporation ("Seller") and
Universal Broadband Communications, Inc., a Nevada corporation
("Purchaser").
WHEREAS, Seller is engaged in the business of, among other things,
sales and services related to long distance services in the United States
(the "Customer Base"); and
WHEREAS, Purchaser desires to purchase from shareholders (as defined
below), and Seller desires to sell to shareholders, all of shareholders'
shares of common stock of Seller.
NOW THEREFORE, by exchange of voting stock of Purchaser for all of
the shares of Seller and the persons whose names and signatures appear at
the end of this Plan and Agreement of Reorganization ("Agreement"), all
of whom are shareholders of Seller, referred to collectively as
"shareholders" and individually as "shareholder," agree as follows:
ARTICLE I
PLAN OF REORGANIZATION
Section 1.01 PLAN ADOPTED. A plan of reorganization of Purchaser and
Seller, pursuant to the provisions of Internal Revenue Code Section
368(a)(1)(B), is adopted as follows:
(a) Each shareholder will transfer to Purchaser the number of
shares of capital stock of Seller set forth opposite his or her
name in subsection (d) below, which together will constitute
all of the issued and outstanding shares of stock of Seller.
(b) Shareholders will place certificates, in form for transfer,
representing the shares in escrow for delivery pursuant to the
terms hereunder with Palmieri, Tyler, Xxxxxx, Xxxxxxx & Xxxxxxx
LLP, as escrow holder. Shareholders agree that the shares to
be transferred by them, represented by the certificates so held
in escrow are subject to the interests of Purchaser, that the
arrangements made by them for that escrow are to that extent
irrevocable, that except as otherwise provided in this
Agreement their obligations under this Agreement shall not be
terminated by operation of law or the occurrence of any event,
including death, and that if any such event shall occur before
the delivery of the shares to be exchanged hereunder,
certificates for those shares shall be delivered by the escrow
holder in accordance with the terms and conditions of this
Agreement as if that event had not occurred, whether or not the
escrow holder receives notice of that event.
(c) In exchange for the number of shares transferred by each
shareholder, Purchaser will cause to be delivered to each
shareholder the number of shares of common stock of Purchaser
set forth opposite the name of the shareholder in subsection
(d), below. The common stock may consist of issued and
outstanding shares, treasury shares, or authorized but unissued
shares, or any combination thereof.
(d) The shares of Seller, to be transferred by the respective
shareholders to Purchaser, and the shares of common stock of
Purchaser, to be delivered by Purchaser for the account of the
respective shareholders, are as follows:
Shareholder Shares of Seller Shares of Purchaser
----------- ---------------- -------------------
Xxxxx Xxxxxx 1000 100,000
Section 1.02 TIME AND PLACE. The closing of the transactions
contemplated hereby (the "Closing") shall occur at the offices of
Palmieri, Tyler, Xxxxxx, Xxxxxxx & Xxxxxxx LLP on or before June 4, 2002
(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 1:00
p.m., local time, on the Closing Date and proceed promptly to conclusion.
Section 1.03 Deliveries.
(a) DELIVERIES BY SELLER. Seller shall deliver to Purchaser at the
Closing the following:
(i) copies, certified as of the Closing Date by a proper officer of
each of the Seller, of the resolutions of the Boards of
Directors of each of the Seller authorizing the execution,
delivery and performance of this Agreement and the documents to
be executed by Seller hereunder referred to in this Section
1.03(a) by Seller;
(ii) The certificates of the shares of Seller as set forth in
Section 1.01.
(b) DELIVERIES BY PURCHASER. Purchaser shall deliver to Seller at
the Closing the following:
(i) a copy, certified by a proper officer of Purchaser, of the
resolutions of the Board of Directors of Purchaser authorizing
the execution, delivery and performance of this Agreement and
the documents to be executed by Purchaser hereunder;
(ii) The certificates of the shares of Purchaser as set forth in
Section 1.01.
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Article II.
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS OF SELLER
As set forth herein, statements, representations and warranties made
by Seller and/or shareholders are made and limited to the present actual
knowledge of Xxxxx Xxxxxx, without any duty of inquiry or investigation.
Except as provided herein, Seller and/or shareholders make no statement,
representation or warranty as to the future financial performance of
Seller or the utility or usefulness of the Customer Base to Purchaser.
Shareholders hereby represent and warrant to Purchaser that:
Section 2.01 ORGANIZATION AND GOOD STANDING. Seller is a corporation
duly organized, validly existing and in good standing under the laws of
the state of California, 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's assets are set forth on Schedule 2.01 hereto (the
"Assets"). 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 2.01 hereto, except where the failure to be qualified or
licensed would not have a material adverse effect on the Assets,
business, liabilities, financial condition, results of operation or
prospects of such Seller (a "Material Adverse Effect"). No material
portion of the Customer Base is owned or conducted by any entity other
than the Seller.
Section 2.02 CAPITALIZATION. Seller has an authorized capitalization
consisting of 1,500,000 shares of capital stock, each of no par value, of
which 1,000 shares are validly issued and outstanding, fully paid and
nonassessable. Seller has no obligation of any kind to issue any
additional capital stock or other securities, and has no other
outstanding securities.
Section 2.03 AUTHORIZATION AND VALIDITY. Seller and shareholders have
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 any of the shareholders hereunder (the "Ancillary
Agreements") by the shareholders and/or Seller, and the consummation of
the transactions contemplated hereby and thereby, have been duly
authorized by all necessary corporate action by each shareholder and/or
Seller, and no other corporate action on the part of any 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 any shareholder and/or 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 each shareholder and/or Seller that is a party
thereto and constitutes the legal, valid and binding obligation of each
such shareholder and/or Seller, enforceable against each such
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shareholder and/or 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.
Section 2.04 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution,
delivery and performance by the shareholders of this Agreement and the
Ancillary Agreements, and the consummation of the transactions
contemplated hereby and thereby, will not: (i) violate or conflict with
any provision of the Certificate of Incorporation or By-Laws of any of
the Seller; (ii) 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 the Seller is a party or by which the Seller is
bound, or result in the creation of any Encumbrance or other right of any
third party upon any of the Assets; (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 the Seller or its assets may be subject; or (iv)
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
Customer Base is conducted; provided however, that Seller and/or
shareholders make no representation or warranty as to the effect of, or
compliance with, any foreign laws or United States export laws concerning
computer equipment or information, the transfer of foreign assets, or
foreign corporations. Additionally, Purchaser shall obtain any consents,
if necessary, of the United Stated Federal Communications Commission
("FCC") to transfer any FCC licenses required by Purchaser to use any of
the Assets or effect any of the provisions of this Agreement.
Section 2.05 ABSENCE OF CHANGES OR EVENTS. Except as set forth in
Schedule 2.05 hereto, since December 31, 2001, the Business has been
carried on in the ordinary course in a manner consistent with past
practice. Except as disclosed in Schedule 2.05 hereto, Seller has not,
since December 31, 2001, (a) incurred any obligation or liability
relating to the Customer Base (whether absolute, accrued, contingent or
otherwise), other than in the ordinary course of business and consistent
with past practice; (b) mortgaged, pledged, granted a security interest
in or subjected to any encumbrance any of the Assets; (c) sold or
transferred any of the Assets, other than in the ordinary course of
business, or canceled any debts or claims or waived or released any
rights of the Customer Base; (d) leased, licensed or granted to any third
party any rights in any of the Assets; (e) experienced any event,
circumstance or condition which has had, or with the passage of time is
reasonably likely to have, a
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Material Adverse Effect; (f) suffered any material damage, destruction or
loss of physical property or goods, whether or not covered by insurance,
relating to the Assets; (g) made any change in any accounting principles
or practices or in its method of applying such accounting principles or
practices, or made any material change in any business practice affecting
the Customer Base; (h) granted any material increase in the salary,
commission rate or other compensation (including, without limitation,
bonuses, profit sharing or deferred compensation) payable or to become
payable to any Employee, Former Employee, consultant or agent of the
Customer Base other than in the ordinary course of business consistent
with past practice; (i) waive any material right or cancel or enter into
any material contract, lease, license, obligation, commitment, purchase
or sale, debt or claim relating to the Customer Base other than in the
ordinary course of business; or (j) entered into any agreement to do any
of the foregoing.
Section 2.06 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in
Schedule 2.06 hereto, and except (i) for liabilities and obligations
incurred pursuant to the Assumed Contracts, (ii) for liabilities and
obligations reflected in the Pro Forma Financial Statements, or (iii) for
liabilities and obligations incurred in the ordinary course of business
since December 31, 2001, Seller has no liabilities or obligations of any
nature, whether absolute or contingent, accrued or unaccrued, or known or
unknown related to the Customer Base and for which Purchaser shall be
liable after the Closing.
Section 2.07 NO CLAIMS OR LITIGATION. 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 any
of the shareholders or Seller(or any of their affiliates, including
directors, officers, employees or agents) relating to or affecting,
directly or indirectly, the Customer Base. There are no such suits,
actions, proceedings, claims or investigations pending or, to the
knowledge of shareholders, 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 the Seller is a party and which would materially affect
the Customer Base, which is unsatisfied or which requires continuing
compliance therewith by the Seller.
Section 2.08 TITLE TO ASSETS AND RELATED MATTERS.
(a) Seller has good and marketable title to the Customer Base, 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
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(i) statutory liens for Taxes not yet delinquent provided such
liens are discharged through the timely filing of Tax returns,
(ii) Encumbrances disclosed in Schedule 2.08(a) and (iii) 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 Customer Base) in any material respect. Except
as disclosed in Schedule 2.08(a) hereto, the Customer Base
constitute all tangible and intangible assets relating to, used
in, held for use in or necessary for the conduct of the
Customer Base as currently conducted.
(b) The long distance services sold by the Seller are not subject
to any claims by any end-users of such services and, to the
knowledge of the shareholders, conform in all material respects
with all Federal, state and local laws, ordinances, rules,
regulations and similar governmental and regulatory
requirements.
Section 2.09 CONTRACTS. (a)Except as set forth on Schedule 2.09(a), the
Seller is not a party to, or subject to:
(i) any lease of personal property that is material to the Customer
Base;
(ii) any lease of real property that is material to the Customer
Base;
(iii) any license agreement currently in effect which grants rights
with respect to any of the Assets that is material to the
Customer Base;
(iv) any written contract, arrangement or understanding currently in
effect not made in the ordinary course of business that is
material to the Customer Base;
(v) 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
Customer Base;
(vi) any express warranty, indemnity or guaranty issued by the
Seller that is material to the Customer Base;
(vii) any written contract, arrangement or understanding granting to
any person the right to use any of the Assets that is material
to the Customer Base;
(viii) any written contract, arrangement or understanding with a
Related Party that is material to the Customer Base;
(ix) any other agreement that is material to the Customer Base,
including, but not limited to, joint venture agreements,
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purchase and sale agreements and collective bargaining, union,
consulting and employment contracts; and
(x) any outstanding commitment or obligation to enter into any
contract or arrangement of the nature described in subsections
(i) through (ix) of this subsection 2.09(a).
Seller has previously delivered or made available to Purchaser
complete and correct copies (or, in the case of oral contracts, a
complete and correct description) of each contract, agreement,
arrangement and understanding (and any amendments or supplements thereto)
listed on Schedule 2.09(a) hereto (the "Material Contracts"). The Seller
is not a party or subject to any oral contract, arrangement or
understanding, or series of related oral contracts, arrangements or
understandings, that is material to the Customer Base.
(b) Schedule 2.09(b) hereto lists those Material Contracts which
are to be assumed by Purchaser at the Closing pursuant to this
Agreement (the "Assumed Contracts"). Except as set forth in
Schedule 2.09(b) hereto, (i) each Assumed Contract is in full
force and effect; (ii) neither Seller nor (to the knowledge of
Seller) any other party is in material default under any such
contract, and 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 knowledge of Seller)
a default by any other party under such contract, other than
those defaults that would not have, individually or in the
aggregate, a Material Adverse Effect; (iii) to the knowledge of
Seller, there are no disputes or disagreements between any
Seller and any other party with respect to any such contract;
and (iv) the Seller is not currently renegotiating any of its
contracts, nor is the Seller paying liquidated damages in lieu
of performing any of its contracts.
Section 2.10 SUPPLIERS; INVENTORIES. Schedule 2.10 hereto sets forth a
complete and correct list and description (including price and other
terms) of all supply contracts, agreements and understandings relating to
the Customer Base between the Seller and (i) any subsidiary or other
affiliate of Seller, and (ii) all other suppliers of goods and services
who are currently providing goods or services to the Business which are
expected to involve, for the twelve-month period ending December 31,
2002. Except as set forth in Schedule 2.10, no supplier identified in
Schedule 2.10 hereto pursuant to clause (ii) of the preceding sentence
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 the Seller with any such supplier. The Seller has not
received notice from the supplier of any product or service which is
material to the Customer Base as to the possible shortage or other
disruption in the supply of such key product or service.
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Section 2.11 ABILITY TO CONDUCT THE CUSTOMER BASE. To the knowledge of
Seller, 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 Customer Base 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 the Seller) in connection with the
Customer Base. Seller and shareholders make no representation or
warranty to Purchaser hereunder as to the benefits available to Purchaser
due to Purchaser's use or purchase of the Customer Base.
Section 2.12 COMPLIANCE WITH APPLICABLE LAW AND REGULATIONS. Seller has
received no written notice that either the Assets or Seller's operation
of the Customer Base as presently conducted are in material violation of
any applicable 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 state or locality. No claims are currently
pending against the Seller, and the Seller has not received any notice
alleging any such violation, nor, to the knowledge of Seller, is there
any inquiry, investigation or proceeding relating thereto.
Section 2.13 TRANSACTIONS WITH RELATED PARTIES. Schedule 2.13 hereto
contains an accurate and complete list of, and sets forth the principal
terms and conditions of, all material agreements, arrangements and
understandings relating to or affecting the Customer Base between Seller
and any of the following (each, a "Related Party"): (i) each shareholder,
member, director and officer of each of the Seller; (ii) the spouses,
children and other lineal descendants of any shareholder, member,
director or officer of each of the Seller (collectively, "near
relatives"); (iii) any trust for the benefit of any shareholder, member,
director or officer of any of the Seller or any of their respective near
relatives; and (iv) any corporation, partnership, joint venture or other
entity owned or controlled by any shareholder, member, director or
officer of the Seller or any of their respective near relatives.
Section 2.14 PRODUCTS. Seller has previously delivered to Purchaser
copies of all past and present written standards and written warranties
relating to the Customer Base extended by Seller with respect to the
products now or in the past sold by Seller. With respect to the Customer
Base, except as disclosed on Schedule 2.14 hereto, to the knowledge of
Seller, the Seller has not, and Seller knows of no basis for, any
material liabilities as a result of claims which may be made against the
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Seller based on defective products, violation of product warranties,
violation of product packaging or labeling requirements or similar claims
with respect to any products manufactured or sold by Seller or delivered
to customers on or prior to the date hereof, nor has Seller received any
written notices from any person threatening any such claims. With
respect to the Customer Base, all product warranties extended by Seller
are in compliance in all material respects with all applicable law.
Section 2.15 NO TRANSACTIONS. There are no agreements, arrangements or
understandings involving the purchase, sale or other disposition of the
Customer Base, whether through a sale of assets, a sale of the capital
stock of the Seller, a merger or otherwise, other than this Agreement.
Section 2.16 FINDER'S FEE. Shareholders have not incurred any obligation
for any finder's, broker's or agent's fee in connection with this
Agreement or the transactions contemplated hereby.
Section 2.17 ACQUISITION FOR INVESTMENT. Shareholders are acquiring the
shares of capital stock of Purchaser for investment, and not with a view
to or for sale in connection with any distribution of that stock.
Article III.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby makes the following representations and warranties
to Seller and shareholders:
Section 3.01 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 Nevada and any other states as may be required
for Purchaser's business 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.
Section 3.02 CAPITALIZATION. Purchaser has an authorized capitalization
consisting of 100,000,000 shares of capital stock, 90,000,000 of which
are common stock, each of $0.001 par value, and 10,000,000 of which are
preferred stock, each of $0.001 par value, of which 5,474,000 shares of
common stock are validly issued and outstanding, fully paid and
nonassessable, and 6050 shares of Series A preferred stock are validly
issued and outstanding, fully paid and nonassessable. Seller has no
obligation of any kind to issue any additional capital stock or other
securities, and has no other outstanding securities.
Section 3.03 STATUS OF SHARES BEING TRANSFERRED. Purchaser has delivered
a draft registration statement covering the shares of
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stock of Purchaser that are to be issued and delivered to shareholders
pursuant to the terms of this Agreement and Purchaser represents and
warrants that the information set forth in such registration statement is
complete and accurate in all material respects. The shares of stock of
Purchaser that are to be issued and delivered to shareholders pursuant to
the terms of this Agreement, when issued and delivered, will be validly
authorized and issued, and will be fully paid and nonassessable voting
shares. Purchaser has applied for registration, and shall use its best
efforts to register, without restriction on the Seller's right to
immediately alienate the same, the shares of stock of Purchaser that are
to be issued and delivered to shareholders pursuant to the terms of this
Agreement on a national trading exchange by October 31, 2002. No
shareholder of Purchaser will have any preemptive right of subscription
or purchase with respect to any of those shares. In the event that
Purchaser does not register the shares of stock of Purchaser that are to
be issued and delivered to shareholders pursuant to the terms of this
Agreement on the Nasdaq Exchange by October 31, 2002, Purchaser shall buy
all of the shares of Purchaser issued and delivered to shareholders under
this Agreement at a purchase price of One dollar ($1.00) per share.
Section 3.04 ACQUISITION FOR INVESTMENT. Purchaser is acquiring the
shares of capital stock of Seller for investment, and not with a view to
or for sale in connection with any distribution of that stock.
Section 3.05 AUTHORITY; BINDING EFFECT; PERFORMANCE. Purchaser has all
requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement, the Note and the Pledge Agreement.
The execution, delivery and performance of this 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 or the performance of this
Agreement by Purchaser and the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered
on behalf of Purchaser and constitute legal, valid and binding
obligations of Purchaser, enforceable against Purchaser in accordance
with its terms.
Section 3.06 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; (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
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upon any of the assets of Purchaser; (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 (iv)
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.
Section 3.07 NO CLAIMS OR LITIGATION. There are no suits, actions,
claims, proceedings (including, without limitation, arbitral and
administrative proceedings) or governmental investigations pending or, to
the knowledge of Purchaser, threatened against or contemplated against
Purchaser (or any of its affiliates, including directors, officers,
employees or agents) relating to or affecting, directly or indirectly,
the current business of Purchaser. There are no such suits, actions,
proceedings, claims or investigations pending or, to the knowledge of
shareholders, threatened challenging the validity or propriety of, or
otherwise involving, this Agreement or the transactions contemplated
hereby.
Section 3.08 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.
Section 3.09 RELIANCE. The foregoing representations and warranties are
made by Purchaser with the knowledge and expectation that shareholders
are 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 shareholders whether in contemplation of this Agreement or
otherwise.
Section 3.10 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 and/or the
shareholders 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.
PURCHASER'S COVENANTS AND COVENANTS OF BOTH PARTIES
Section 4.01 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
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transactions contemplated by this Agreement in accordance with, and
subject to, the terms and conditions of this Agreement.
Section 4.02 CONFIDENTIALITY. Purchaser will, and will use its best
efforts to cause its employees and agents to, hold in strict confidence,
unless compelled to disclose by judicial or administrative process or, in
the opinion of counsel, by other requirements of law, all Confidential
Information (as hereinafter defined). Purchaser will provide notice to
Seller and an opportunity to eliminate or modify any such requirement of
law before any such disclosure. Purchaser will not disclose the
Confidential Information to any person, except as otherwise may
reasonably be necessary to carry out the transactions contemplated by
this Agreement, including any business or due diligence review by or on
behalf of Purchaser. If this Agreement is terminated as provided
hereinafter, then Purchaser shall return or cause to be returned promptly
to Seller all documents and all copies thereof furnished by Seller and
held by Purchaser or its representatives containing such Confidential
Information. For the purposes hereof, "Confidential Information" shall
mean all information of any kind concerning Seller and/or shareholders in
connection with the transactions contemplated by this Agreement except
information: (i) ascertainable or obtained from public or published
information; (ii) received from a third party not known by Purchaser to
be under an obligation to Seller to keep such information confidential;
or (iii) which is or becomes known to the public (other than through a
breach of this Agreement); or (iv) which was in Purchaser's possession
prior to disclosure thereof to Purchaser in connection herewith.
Section 4.03 ACCESS AFTER CLOSING.
(a) Purchaser and the shareholders agree to retain all accounting
(including, without limitation, accountants' work papers),
business, financial and Tax records in its possession (i)
relating to Seller's business as conducted and in existence on
the Closing Date and either sold to Purchaser hereunder or
retained by shareholders thereafter, as the case may be, or
(ii) coming into existence after the Closing Date which relate
to the Seller's 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 the 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
Seller's business as the other party may reasonably deem
necessary to properly prepare for, file, prove, answer,
prosecute and/or defend any financial statements, Tax return,
filing, audit, judicial or administrative
12
proceeding, protest, claim, suit, inquiry or other proceeding.
(b) The party requesting assistance hereunder shall pay to the
party whose assistance is requested the reasonable costs of the
party providing such assistance.
Section 4.04 MAIL AND COMMUNICATIONS. (a) Shareholders shall promptly
remit to Purchaser any mail or other communications, including, without
limitation, any written inquiries, and payments received by shareholders
related to the Customer Base and any invoices received by shareholders
relating to the Assumed Liabilities which are received by shareholders
from and after the Closing Date.
Article V.
COVENANTS
Section 5.01 ACCESS; DUE DILIGENCE. Seller shall permit Purchaser and
its authorized representatives full access to, and make available for
inspection, the Customer Base, 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 Customer Base of Seller.
Section 5.02 Material Change. Prior to the Closing, Seller and Purchaser
shall promptly inform the other party in writing of any material adverse
change in the condition of the Customer Base. 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.
Section 5.03 FURTHER ASSURANCES. Seller shall, at any time and from time
to time after the Closing, 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 Customer Base and to comply with all applicable legal
requirements, including, without limitation, making any required
governmental filings, in connection with the purchase of the Customer
Base 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.
13
Article VI.
PURCHASER'S CONDITIONS PRECEDENT
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:
Section 6.01 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of shareholders and/or 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.
Section 6.02 PERFORMANCE. Shareholders 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 it on or prior to the
Closing.
Section 6.03 DELIVERIES. Shareholders shall have delivered each of the
documents required pursuant to Section 1.01 in each case in form and
substance satisfactory to Purchaser.
Section 6.04 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.
Section 6.05 APPROVALS, PERMITS, ETC. All consents, authorizations,
approvals, exemptions, licenses or permits of, or registrations,
qualifications, declarations or filings with, any governmental or
regulatory body or agency thereof that are (i) required in connection
with the consummation of the transactions contemplated hereby and (ii)
are necessary for Purchaser to properly conduct the Customer Base shall
have been transferred by Seller or otherwise obtained by Purchaser. No
warranty is made by Seller and/or shareholders as to the availability to
Purchaser of the consents, authorizations, approvals, exemptions,
licenses or permits of, or registrations, qualifications, declarations or
filings set forth in the preceding sentence.
Article VII.
SHAREHOLDERS' CONDITIONS PRECEDENT
Except as may be waived in writing by Shareholders in Shareholders' sole
discretion, the obligations of Shareholders hereunder are subject to
fulfillment at or prior to the Closing of each of the following
conditions:
14
Section 7.01 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.
Section 7.02 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 it on or prior to the
Closing.
Section 7.03 DELIVERIES. Purchaser shall have delivered each of the
documents required pursuant to Section 1.01 in each case in form and
substance satisfactory to shareholders and its counsel.
Section 7.04 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.
Article VIII.
INDEMNIFICATION
Section 8.01 PURCHASER'S INDEMNITY. Subject to the terms and conditions
of this Article VIII, Purchaser hereby agrees to indemnify, defend and
hold Seller 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
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.
(b) any claim against, or claim relating to any action of
Seller or Purchaser which takes place after the Closing.
Section 8.02 REMEDIES NOT EXCLUSIVE. The remedies provided in this
Article VIII shall not be exclusive of any other rights or remedies
available by one party against the other, either at law or in equity.
Article IX.
MISCELLANEOUS
Section 9.01 AMENDMENT. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by the
15
party against which enforcement of the amendment, modification or
supplement is sought.
Section 9.02 ASSIGNMENT. Neither this Agreement nor any right created
hereby shall be assignable by either party hereto.
Section 9.03 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. Such
notice shall be deemed received on the date on which it is hand-delivered
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: Xxxxx Xxxxxx
Universal Information Services, Inc.
00000 Xxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
If to the
Shareholders: Xxxxx Xxxxxx
Universal Information Services, Inc.
00000 Xxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
If to Purchaser: Universal Broadband Communications, Inc.
00000 Xxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxx Xxxxx
Any party may change its address for notice by written notice given to
the other parties.
Section 9.04 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, but each party will notify the other parties in advance of any such
disclosure. 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
9.04, 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. Purchaser and the shareholders shall consult with each other
in releasing information concerning this Agreement and the transactions
contemplated hereby. Each of the parties to
16
this Agreement shall furnish to the other drafts of all releases prior to
publication.
Section 9.05 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.
Section 9.06 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. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements
in addition to any other relief to which such party may be entitled.
Section 9.07 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.
Section 9.08 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
shareholders or Purchaser pursuant to this Agreement shall be deemed to
have been representations and warranties by shareholders 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.
Section 9.09 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.
Section 9.10 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
17
Section 9.11 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.
Section 9.12 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.
Section 9.13 GOVERNING LAW. The Parties hereby agree that this Agreement
shall be governed and construed in accordance with the laws of the State
of California, without giving effect to principles of conflicts of law
thereunder.
Article X.
TERMINATION
Section 10.01 TERMINATION OF AGREEMENT. Certain of the parties may
terminate this Agreement as provided below:
(a) the Purchaser and the shareholders may terminate this Agreement
by mutual written consent at any time prior to the Closing;
(b) the Purchaser may terminate this Agreement by giving written
notice to the shareholders on or before the later of (i) the
date upon which the shareholders deliver all of the schedules
to Purchaser and (ii) June 1, 2002, if the Purchaser in its
reasonable discretion is not satisfied with the results of its
continuing business, legal, and accounting due diligence
regarding the Seller's business;
(c) the Purchaser may terminate this Agreement by giving written
notice to the shareholders at any time prior to the Closing (i)
in the event the Seller and/or shareholders have breached any
representation, warranty, or covenant contained in this
Agreement in any material respect, the Purchaser has notified
the Seller and/or shareholders, respectively, of the breach,
and the breach has continued without cure for a period of five
(5) days after the breach or (ii) if the Closing shall not have
occurred on or before June 1, 2002, by reason of the failure of
any condition precedent under Article VII hereof (unless the
failure results primarily from the Purchaser itself breaching
any representation, warranty, or covenant contained in this
Agreement); and
(d) The shareholders may terminate this Agreement by giving written
notice to the Purchaser at any time prior to the Closing (i) in
the event that the Purchaser has breached any material
representation, warranty or shareholders contained in this
Agreement in any material respect, shareholders have notified
Purchaser of the breach and the breach has continued without
cure for a period of five (5) days after
18
the notice of breach or (ii) if the Closing shall not have
occurred on or before June 1, 2002, by reason of the failure of
any condition precedent under Article VII hereof (unless the
failure results from any of the Seller and/or shareholders
breaching any representation, warranty or covenant contained in
this Agreement.
Section 10.02 EFFECT OF TERMINATION. If any party terminates this
Agreement pursuant to Section 10.01 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 each caused to be affixed hereto its or his/her hand and
seal the day indicated.
SELLER:
------
UNIVERSAL INFORMATION SERVICES, INC.
By: /s/ XXXXX XXXXXX
----------------------------
Name: Xxxxx Xxxxxx
Its: President
By: /s/ XXXXX XXXXXX
----------------------------
Name: Xxxxx Xxxxxx
Its: Secretary
SHAREHOLDERS
------------
/s/ XXXXX XXXXXX
----------------------------
XXXXX XXXXXX
PURCHASER:
---------
UNIVERSAL BROADBAND COMMUNICATIONS, INC.
By: /s/ XXXX XXXXX
----------------------------
Name: Xxxx Xxxxx
Its: President
By: /s/
----------------------------
Name:
Its: Secretary
19
Schedule 2.01
Assets
The Assets include, without limitation:
(a) CONTRACTS, LICENSES, PERMITS AND LEASES. All of Seller's
rights under assignable contracts, licenses, permits, leases
with regard to the Customer Base, CIC and Switch Partitions,
including all permits, licenses, franchises, approvals and
authorizations by governmental or regulatory authorities or
bodies relating to the Purchased Business ("Authorizations"),
to the extent that the authorities or bodies approve the
transfer or assignment of the Authorizations, by Sellers to
Purchaser;
(b) ASSUMED CONTRACTS. All of Seller's right, title and
interest in and to the Assumed Contracts (as hereinafter
defined);
(c) TRADE SECRETS, KNOW-HOW, ETC. All trade secrets,
inventions, protocols, know-how, formulae, processes,
procedures, recipes, records of inventions, test information,
drawings, diagrams, designs, operating manuals and other
proprietary information of Seller used in connection with the
Customer Base;
(d) TOLL-FREE NUMBERS AND PIN NUMBERS. Any toll-free
telephone numbers and Personal Identification Numbers (PINs)
used in the Customer Base;
(e) ACCOUNTS RECEIVABLES. Billed accounts receivable and known
unbilled accounts receivable as of the date of Closing;
(f) PRE-PAID CALLING CARD PLATFORM. Any pre-paid calling
cards and marketing used in connection with UIS.
Notwithstanding the above provisions of Schedule 2.01, the following
assets (the "Excluded Assets") are not included in the Assets and shall
be excluded from the Assets for all purposes hereunder:
(a) insurance policies of shareholders and rights in connection
therewith, and rights arising from any refunds due with respect
to insurance premium payments therefor;
(b) all rights to refunds, credits or overpayments with respect to
Taxes paid or accrued by shareholders. For purposes of this
Agreement, the terms "Tax" and "Taxes" shall mean and include
any and all foreign, national, Federal, state, local or other
income, franchise, sales, gross receipts, use, value added,
goods and services, withholding, employment, payroll, social
security, unemployment, real and personal
property taxes, stamp duty, environmental (including taxes
under Code Section 59A), customs duty and intangibles tax,
alternative or add on minimum or estimated tax, and all other
taxes of any nature, deficiencies, fees, assessments, interest,
penalties or any other governmental charges, duties,
impositions and liabilities of whatever nature, including,
without limitation, any installment payment for taxes and
contributions or other amounts determined with respect to
compensation paid to directors, officers, employees or
independent contractors, from time to time imposed by or
required to be paid to any governmental authority (including
penalties and additions to taxes thereon, penalties for failure
to file a return or report and interest on any of the
foregoing);
(c) Shareholders' rights, title and interest in and to all
arrangements or understandings under the Excluded Contracts (as
hereinafter defined).
Schedule 2.05
Changes
N/A
Schedule 2.06
Undisclosed Liabilities
N/A
Schedule 2.09(a)
Contracts
Schedule 2.09(b)
Contracts to be Assumed
(accounts payable)
Schedule 2.10
Supply Contracts
N/A
Schedule 2.13
Related Party Transactions
N/A
Schedule 2.14
Product Claims
N/A
