EXHIBIT 10.19
AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
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THIS AMENDED AND RESTATED ASSET PURCHASE AGREEMENT (the "Agreement"), made and
entered into as of this 16th day of October, 2006, by and between the Buyer, as
defined below, and the Seller, as defined below.
As used in this Agreement, the term "Buyer" includes ERF Wireless, Inc., a
Nevada corporation ("Parent"), and ERF Wireless Bundled Services, Inc.., a Texas
corporation ("Subsidiary").
As used in this Agreement, the term "Seller" means NetYeti, Inc., a Texas
corporation, with its principal place of business in Lake Jackson, Texas.
W I T N E S S E T H:
WHEREAS, Seller presently operates a business engaged in providing fixed
wireless broadband Internet solutions and bandwidth to residential and
commercial businesses (the "Business"); and
WHEREAS, Seller desires to sell substantially all of the assets and contracts of
the Business to Buyer, and Buyer desires to purchase such assets and contracts
from Seller, on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, Buyer and Seller, in consideration of the mutual promises
hereinafter set forth, do hereby promise, and agree as follows:
ARTICLE ONE: ASSETS TO BE PURCHASED
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1.1 SUBJECT ASSETS. Upon the terms and subject to the conditions set forth in
this Agreement, Seller hereby sells to Subsidiary and Subsidiary hereby
purchases from Seller, at the Closing, all of Seller's right, title, and
interest in substantially all of the assets associated with the Business,
including the following:
All cash, cash equivalents, accounts (including without limitation, any
accounts, deposit accounts;
all inventory, equipment, goods, documents pertaining to operations,
instruments (including, without limitation, promissory notes);
all rights to equipment, tower and office space leases;
all contract rights including ISP Subscriber Agreements, all Design
Agreements, Equipment Purchase Agreements, Internet Access and Monitoring and
Maintenance Agreements with commercial customers, including the existing dial-up
customers;
all general intangibles, chattel paper, supporting obligations,
investment property (including without limitation, all equity interests owned by
Seller);
all letter of credit rights;
all accounts and notes receivable, all work in progress, and all other
contracts and agreements relating to the conduct of the Business;
all equipment and software;
the 1996 Ford and 1993 GMC bucket trucks;
the 40 foot trailer mounted tower;
the BDN 70 foot crank-up tower;
all legally assignable government permits, licenses and certifications
("Governmental Permits"); and
all proceeds and products thereof, all documents, files and records
containing technical support, all additions, accessions and substitutions
thereto and other information pertaining to the operation of the Business.
All of the assets being purchased by Buyer as described in this Paragraph 1.1
are hereinafter referred to as the "Subject Assets."
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Documentation that will be provided under the purchase will include copies of
the following books, records, manuals and other materials in any tangible form
to the extent relating to the Business and/or the Subject Assets: records
relating to customers that are parties to any contracts, records relating to
vendors, and all other books, records, files, correspondence, documents and
information owned by Seller relating to the Business that are currently in the
possession of the employees of the Business, however maintained or stored
(collectively, the "Records"), it being understood that the Seller may cause to
be deleted confidential information that does not relate to the Subject Assets
or the Business.
1.2 EXCLUDED ASSETS. The Subject Assets shall not include the following (herein
referred to as the "Excluded Assets"):
all corporate minute books, stock transfer books and other document
relating to the organization, maintenance and existence of Sellers as a
corporation ("Corporate Documents");
all rights of Seller pursuant to this Agreement, including the
consideration paid to Seller pursuant to this Agreement;
all originals of personnel records and other records that Seller are
required by applicable law to retain in its possession;
all tax refunds which Seller is due;
all capital stock in Seller; and
any other item specifically listed in Schedule 1.2.
1.3 PURCHASE PRICE; PAYMENT OF PURCHASE PRICE. In addition to the Assumed
Liabilities described below, the aggregate consideration for the Subject Assets
(the "Purchase Price") shall be the amount equal to: $300,000, (the "Initial
Payment"), plus an Earnout to be calculated as follows, (the "Purchase Price"):
>> One (1) times Gross Revenue Incremental Growth of 36db for the
time period after closing until December 31, 2006. plus
>> One (1) times Gross Revenue Incremental Growth of 36db for the
calendar year ending December 31, 2007; plus
>> One (1) times Gross Revenue Incremental Growth of 36db for the
calendar year ending December 31, 2008.
1.4 PAYMENT TERMS. The Initial Payment of the Purchase Price will be payable to
Seller by Buyer on the Closing date and shall be paid through the issuance of
shares in Parent Restricted Common Stock. Subsequent annual payments for Earnout
based on Incremental Revenue will be payable on the 1st of April following the
close of each calendar year for which payment is to be made (each an "Annual
Payment Date"). The Initial Payment will be paid by the issuance of 750,000
shares of Parent Restricted Stock and each Annual Payment will be paid by
issuance of Parent Restricted Common Stock; the number of shares of which would
be calculated based on the average closing price for the 20 trading days
immediately preceding each respective payment. For purposes of the calculating
the Initial Payment, the number of shares was calculated based on the average
closing price for the 20 trading immediately preceding the date of the original
agreement; October 2, 2006. The Parent agrees to provide its transfer agent with
an opinion letter and instructions to remove the restricted legend from Seller's
shares in accordance with SEC Rule 144, following the 12-month holding period
that begins on the share issuance date. Further, the Parent Restricted Common
Stock shall be distributed to NetYeti, Inc. or alternatively as instructed by
the Seller pursuant to Schedule 1.4. All fractional shares resulting from a
prorated distribution calculation shall be rounded up to the next whole share
amount.
The Buyer shall provide the Seller with a two year guaranty, secured by the
Assets purchased herewith, in an amount not to exceed $175,000 for covering any
documented shortfalls realized from the open market sale of the Restricted Stock
before the end of the guarantee period. The Seller's legal counsel shall prepare
a UCC-1 acceptable to Buyer; covering the assets conveyed herewith and all new
wireless broadband assets acquired post Closing that are specific to the
exclusive territory set forth in Section 6.4.1 and customers accounts placed by
the Seller. Further, presuming that the Seller has not realized at least
$175,000 in cash from the sale of the Restricted Stock issued for the Purchase
Price by the end of the guaranty period, the Parent Company shall be obligated
to issue additional shares to the Seller to cover any shortfall. Following the
Sellers realization of $175,000 in proceeds from the sale of Restricted Stock or
the end of the guarantee period, whichever occurs first, the Seller shall be
obligated to release the guaranty and liens on the Assets purchased herein.
Further, the Seller shall have the option to retain the stock at the end of the
two year guarantee, although the Seller shall be obligated to release the
guaranty and liens on the Assets set forth in the UCC-1 at the end of the
guarantee period.
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1.5 ASSUMED LIABILITIES; NO OTHER ASSUMPTION OF LIABILITIES. As partial
consideration for the Subject Assets, Subsidiary shall deliver to Seller at
Closing an Assignment and Assumption Agreement pursuant to which Subsidiary
shall assume and pay, perform or discharge, as appropriate, the liabilities and
obligations of Seller (the "Assumed Liabilities") (i) arising in connection with
the operation of the Business by the Subsidiary after the Closing date, (ii)
arising after the Closing date in connection with the performance by the
Subsidiary of the contracts and agreements associated with the Business assigned
to Subsidiary, including the ISP Subscriber Contracts, equipment and tower
leases, office lease and utilities in effect pertaining to the Business,
Equipment Purchase, and Monitoring and Maintenance Agreements in existence with
commercial customers, (iii) a payment obligation to NetYeti, Inc. in the amount
of $25,000 at a 6% interest rate with 24 monthly payments in the amount of
$1,108.02 beginning on November 16, 2006 to cover certain liabilities being
retained by the Seller or Sellers principals, (iv) the note (lease) payable to
the CPE financier, (v) all tower and lease agreements, (vi) certain sales and
property taxes payable and (vii) certain xxxxxxxx in excess of earnings
(customer prepayments). Items (iii), (v), (vi) and (vii) shall be limited to the
amount of cash and cash collected from accounts receivable transferred to the
Purchaser on the Closing Date. Should the Purchaser not realize enough cash and
cash collected from accounts receivable transferred to the Purchaser at Closing
or within 90 days of Closing with respect to the accounts receivable transferred
and that are sufficient to offset the liabilities assumed in items (iii), (v),
(vi) and (vii), the Seller shall be obligated to pay the Purchaser any shortfall
that exists. Subsidiary shall not assume or be responsible for any such
liabilities or obligations that arise from breaches thereof or defaults by
Seller prior to the Closing, all of which liabilities and obligations shall
constitute "Specified Retained Liabilities" and all such liabilities shall
either be retained by Seller or be fully paid prior to Closing.
Except for the Assumed Liabilities, Buyer shall not assume or be obligated
under, or become liable for, any debt, liability, contract or obligation
whatsoever of Seller or the Business, and Seller shall be responsible for the
payment or performance and full discharge of all debts, liabilities, contracts
and obligations whatsoever of Seller, including those of the Business accruing
prior to the Closing and the Specified Retained Liabilities. In particular (and
by way only of example and not by way of limitation), Seller shall be and remain
solely responsible for, and shall timely pay or perform and discharge, all
debts, liabilities, contracts and obligations with respect to the Business other
than the Assumed Liabilities (collectively, together with those liabilities and
obligations described in Section 2.2 as constituting the same, "Specified
Retained Liabilities"): (i) all obligations, notes and trade accounts payable
and other accrued interest and expenses payable to affiliates; (ii) all notes
and interest payable to either Xxxxx Xxxxxxxxx or family members, (iii) any tax
liability or obligation relating to transactions or periods prior to and
including the Closing Date (but excluding any sales, use, transfer or other tax
obligation resulting from the transactions contemplated by this Agreement, which
Subsidiary hereby agrees to be responsible for); (iv) any liability or
obligation to Seller's employees whatsoever, whether for salaries and wages,
sick pay, or any other employee benefit and whether relating to the termination
of their employment or otherwise arising, relating to periods prior to and
including the Closing; and (v) any legal claim or any other liability or
obligation whatsoever incurred by Seller relating to the Business for periods or
occurrences prior to and including the Closing Date.
1.6 ALLOCATION OF PURCHASE PRICE. Seller and Buyer shall cooperate to determine
(in accordance with applicable U.S. Treasury regulations promulgated under
Section 1060 of the U.S. Internet Revenue Code, as amended, the allocation of
the Purchase Price and the liabilities of Seller (plus other relevant items)
among the Subject Assets as of the Closing Date. Such allocation shall be made
in a manner consistent with the fair market value of such assets. Each of the
parties will file all tax returns and information reports (including the IRS
Form 8594 and any disclosures that are required under Section 1060 of the
Internal Revenue Code) in a manner consistent with such allocation.
ARTICLE TWO: CLOSING
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2.1 TIME AND PLACE OF CLOSING; CLOSING DELIVERIES. The closing of the purchase
and sale contemplated herein (the "Closing") shall take place at 10:00 a.m., on
October 16, 2006 at the offices of Parent, located at League City, Texas, or
such time and date as the parties may agree upon. The date of Closing is
hereinafter referred to as the "Closing Date."
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At the Closing, Seller shall deliver to Buyer the documents, certificates,
agreements and instruments described in Section 2.2, and Buyer shall deliver to
Seller the documents, certificates, agreements and instruments described in
Section 2.3.
2.2 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION. The obligation of Buyer to
consummate the transactions contemplated herein is subject to the satisfaction
(or, in Buyer's sole discretion, written waiver thereof) as of the Closing of
the following conditions:
The representations and warranties of Seller made in this Agreement shall be
true and correct in all material respects at Closing.
No demand, action, suit, audit, investigation, review, claim or other legal or
administrative proceeding (collectively, a "Proceeding") by any nation or
government, any state or other political subdivision thereof, including any
governmental agency, department, commission, or instrumentality of the United
States, any State of the United States or any political subdivision thereof or,
any self-regulatory agency or authority (collectively, "Governmental Authority")
or other person shall have been instituted or threatened against Seller which
seeks to enjoin, restrain or prohibit, or which questions the validity or
legality of, the transactions contemplated hereby or which otherwise seeks to
affect or could reasonably be expected to affect the transactions contemplated
hereby.
Seller's shareholders shall have approved this Agreement and the transactions
contemplated thereby.
Seller shall have performed in all material respects its obligations described
in Section 5.1.
Seller shall not have billed November services in advance as of the Closing.
Seller shall have entered into a new lease with Lease Corporation of America,
("LCA") for an additional 50 radios and this debt obligation will be assumed by
the Buyer along with the other four existing lease schedules in existence with
LCA. With respect to such leases, Buyers payment obligations will begin with the
applicable November 2006 payment obligation.
Seller, PCCare, Inc., Xxxxx Xxxxxxxxx, Xxx Xxxxxxxxx and their adult children
shall have executed and delivered, subject to Closing, 3 year non-competition
agreements limited to the ISP segment of the fixed wireless broadband industry.
The non-compete obligations shall not include the future and continued business
services currently being provided by PCCare, Inc. to residential, commercial
businesses, municipalities, government and quasi-governmental agencies.
Notwithstanding this exception, both Xxxxx Xxxxxxxxx and PCCare, Inc. will also
agree not to own or operate ISP operations designed and constructed for such
entities. Additionally, the immediate family members of Xxxxx Xxxxxxxxx agree to
be bound by the above conditions for a period of 3 years from the date of
Closing.
Seller shall have provided the Buyer with certifications from the state and
local taxing jurisdictions that all taxes have been paid.
Buyer shall have received from Seller all of the following:
A xxxx of sale including a complete listing of assets in the form of Exhibit 1,
in form and substance satisfactory to Buyer, duly executed by Seller
(collectively, the "Xxxx of Sale"), conveying to Buyer the Subject Assets free
and clear of all pledges, security interests, or other similar liens granted by
Seller and free and clear of all other adverse claims of any kind whatsoever
known by Seller (collectively, "Encumbrances"), except (i) encumbrances for
taxes, the payment of which is not delinquent, (ii) materialmen's,
warehousemen's, mechanic's or other Encumbrances arising by operation of law in
the ordinary course of business for sums not due and which do not materially
detract from the value of such assets or properties or materially impair the
operation of the Business, and (iii) statutory Encumbrances incurred in the
ordinary course of business in connection with worker's compensation,
unemployment insurance or other forms of governmental insurance or benefits
(collectively "Permitted Encumbrances");
An assignment and assumption agreement in the form of Exhibit 2 (the "Assignment
and Assumption Agreement"), duly executed by Seller;
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Actual or constructive physical possession of all of the Subject Assets and the
Records;
A certificate of the Secretary of Seller certifying, as complete and accurate as
of the Closing, attached copies of the governing documents of Seller, certifying
and attaching all requisite resolutions or actions of Seller's board of
directors and shareholders approving the execution and delivery of this
Agreement and the consummation of the contemplated transactions and the change
of name contemplated by Section 1.1 and certifying to the incumbency and
signatures of the officers of Seller executing this Agreement and any other
document relating to the contemplated transactions and accompanied by the
requisite documents for amending the relevant governing documents of Seller
required to effect such change of name in form sufficient for filing with the
appropriate Governmental Body; and
A legal opinion from Seller's counsel that (1) Seller is bound by this Agreement
and (2) subject to Closing, the Xxxx of Sale and Assignment and Assumption
Agreement are in a form legally sufficient to convey to Buyer the Subject Assets
free and clear of all Encumbrances, except Permitted Encumbrances.
2.3 CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS. The obligation of Seller to
consummate the transactions contemplated hereby is subject to satisfaction as of
the Closing of the following conditions (or, in the sole discretion of Seller,
written waiver thereof):
The representations and warranties of Buyer made in this Agreement shall be true
and correct in all material respects at Closing.
No proceeding by any Governmental Authority or other person shall have been
instituted or threatened against Buyer which seeks to enjoin, restrain or
prohibit, or which questions the validity or legality of, the transactions
contemplated hereby or which otherwise seeks to affect or could reasonably be
expected to affect the transactions contemplated hereby.
Seller's historical operations have been in compliance with all applicable laws
and regulations that could have a material adverse impact on the Business.
Buyer shall have performed in all material respects its obligations described in
Section 5.1.
Seller shall have received from Buyer all of the following:
The Payment of the Purchase Price in the form of Parent's Restricted Common
Stock Certificates to those shareholders listed on Schedule 1.4;
Buyer shall issue $25,000 in free-trading shares to Xxxxx Xxxxxxxxx for
consulting services at the Closing for integration and transition period
services through December 31, 2006.
The Assignment and Assumption Agreement, duly executed by Subsidiary;
A certificate of the Secretary of each of Parent and Subsidiary certifying, as
complete and accurate as of the Closing, attached copies of the governing
documents of Parent and Subsidiary, respectively, and certifying and attaching
all requisite resolutions or actions of Buyer's board of directors approving the
execution and delivery of this Agreement and the consummation of the
contemplated transactions and certifying to the incumbency and signatures of the
officers of Buyer executing this Agreement and any other document relating to
the contemplated transactions; and
A legal opinion from Buyer's counsel that (1) Buyer is bound by this Agreement
and (2) subject to Closing, Subsidiary is obligated for the Assumed Liabilities.
2.4 CONSENTS AND OTHER CONDITIONS TO CLOSING. It shall also be a condition
precedent to closing that:
(a) Buyer and Seller shall have obtained all necessary material
consents or approvals from all governmental or regulatory
authorities that are necessary to acquire the Subject Assets
and to continue the historical operations of the Seller in the
Subsidiary;
(b) Seller shall not be involved in or threatened with any
litigation that would have a material adverse effect on the
Subject Assets;
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(c) an environmental inspection (where applicable) by a licensed
environmental inspection firm selected by Parent or Subsidiary
shall have reasonably determined the Subject Assets to be free
from significant environmental liabilities;
Seller shall have obtained all necessary consents from any utility companies,
landlords, lenders, suppliers and other third parties in connection with the
material contracts described in Exhibit 3 to be assumed by Subsidiary at Closing
("Material Consents"). If there are any Material Consents that have not yet been
obtained (or otherwise are not in full force and effect) as of the Closing, in
the case of each Seller contract as to which such Material Consents were not
obtained (or otherwise are not in full force and effect) (the "RESTRICTED
MATERIAL CONTRACTS"), Buyer may waive the closing conditions as to any such
Material Consent and either:
(i) elect to have Seller continue its efforts to obtain the
Material Consents; or
(ii) elect to have Seller retain that Restricted Material Contract
and all Liabilities arising therefrom or relating thereto.
If Buyer elects to have Seller continue its efforts to obtain any Material
Consents and the Closing occurs, notwithstanding Sections 1.1 and 1.5, neither
this Agreement nor the Assignment and Assumption Agreement nor any other
document related to the consummation of the contemplated transactions shall
constitute a sale, assignment, assumption, transfer, conveyance or delivery or
an attempted sale, assignment, assumption, transfer, conveyance or delivery of
the Restricted Material Contracts, and following the Closing, the parties shall
use Best Efforts (other than that Seller and Buyer shall have no obligation to
offer or pay any consideration in order to obtain any such Material Consents),
and cooperate with each other, to obtain the Material Consent relating to each
Restricted Material Contract as quickly as practicable. Pending the obtaining of
such Material Consents relating to any Restricted Material Contract, the parties
shall cooperate with each other in any reasonable and lawful arrangements
designed to provide to Buyer the benefits of use of the Restricted Material
Contract for its term (or any right or benefit arising thereunder, including the
enforcement for the benefit of Buyer of any and all rights of Seller against a
third party thereunder). Once a Material Consent for the sale, assignment,
assumption, transfer, conveyance and delivery of a Restricted Material Contract
is obtained, Seller shall promptly assign, transfer, convey and deliver such
Restricted Material Contract to Buyer, and Buyer shall assume the obligations
under such Restricted Material Contract assigned to Buyer from and after the
date of assignment to Buyer pursuant to a special-purpose assignment and
assumption agreement substantially similar in terms to those of the Assignment
and Assumption Agreement (which special-purpose agreement the parties shall
prepare, execute and deliver in good faith at the time of such transfer, all at
no additional cost to Buyer). If there are any Consents not listed on Exhibit 3
necessary for the assignment and transfer of any Seller contracts to Buyer (the
"NONMATERIAL CONSENTS") which have not yet been obtained (or otherwise are not
in full force and effect) as of the Closing, Buyer shall elect at the Closing,
in the case of each of the Seller contracts as to which such Nonmaterial
Consents were not obtained (or otherwise are not in full force and effect) (the
"RESTRICTED NONMATERIAL CONTRACTS"), whether to:
(i) accept the assignment of such Restricted Nonmaterial Contract, in
which case, as between Buyer and Seller, such Restricted Nonmaterial Contract
shall, to the maximum extent practicable and notwithstanding the failure to
obtain the applicable Nonmaterial Consent, be transferred at the Closing
pursuant to the Assignment and Assumption Agreement as elsewhere provided under
this Agreement; or
(ii) reject the assignment of such Restricted Nonmaterial Contract, in
which case, notwithstanding Sections 1.1 and 1.5, (A) neither this Agreement nor
the Assignment and Assumption Agreement nor any other document related to the
consummation of the Contemplated Transactions shall constitute a sale,
assignment, assumption, conveyance or delivery or an attempted sale, assignment,
assumption, transfer, conveyance or delivery of such Restricted Nonmaterial
Contract, and (B) Seller shall retain such Restricted Nonmaterial Contract and
all liabilities arising therefrom or relating thereto.
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2.5 FAILURE OF CONDITIONS. If any of the conditions to Closing set forth in
Sections 2.2 and 2.3 have not been satisfied, the party or parties entitled to
the benefit of such conditions may elect to terminate this Agreement without
further liability of the terminating party or to consummate the transactions
contemplated hereby and, if any such failure is a result of a breach of any
provision of this Agreement, including the failure of any party to execute
and/or deliver any item required to be executed and/or delivered pursuant to
Sections 2.2 and 2.3, the party or adversely affected thereby may seek
appropriate remedies for any and all damages, costs and expenses incurred by
reason of such breach.
ARTICLE THREE: WARRANTIES AND REPRESENTATIONS OF SELLER
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Seller hereby warrants and represents to Buyer, which warranties and
representations shall survive the Closing for one year, as follows:
CORPORATE MATTERS; NO CONFLICT. Seller is a corporation duly incorporated,
validly existing and in good standing under the Laws of the State of Texas and
has the authority and power, corporate and otherwise, to carry on the Business
in the places and in the manner presently conducted. Seller has the corporate
power and authority to enter into this Agreement and the agreements and
documents to be executed and delivered pursuant to this Agreement (the
"Ancillary Agreements") by Seller and to consummate the transactions
contemplated hereby.
The execution, delivery and performance of this Agreement and the Ancillary
Documents to be executed by Seller and the consummation of the transactions
contemplated hereby have been approved by all necessary corporate action, other
than the Seller's shareholders. This Agreement and the Ancillary Documents to be
executed by Seller constitute, or, in the case of such Ancillary Documents, upon
their execution and delivery by Seller, will constitute, valid and legally
binding obligations of Seller, enforceable against it in accordance with their
respective terms except as such enforceability may be limited by bankruptcy and
other Laws generally affecting the rights of creditors and general principles of
equity.
To Seller's knowledge, there are no material adverse environmental liabilities
associated with the Seller's Business or the Subject Assets.
Except as set forth in Schedule 3, the execution, delivery and performance of
this Agreement and such Ancillary Documents to be executed by Seller and the
consummation of the transactions contemplated hereby by such party: (i) does not
and will not violate, conflict with, or result in the breach of, or default
under, any term, condition or provision of, give rise to any right to terminate,
cancel, modify, accelerate or otherwise change the existing rights or
obligations of such party with respect to, (A) any domestic or foreign Federal,
state or local statute, law, ordinance, rule, administrative interpretation,
regulation, policy, guideline or other requirement of or by any Governmental
Authority, each as amended through the date hereof (collectively, "Laws") which
is applicable to such party, the Business and/or the Subject Assets, (B) any
judgment, order, writ, injunction, decree, directive or award of any arbitrator
or Governmental Authority (collectively, an "Order") which is applicable to such
party, the Business and/or the Subject Assets, (C) the charter documents of
Seller or any securities issued by Seller, or (D) any authorization, approval,
consent, qualification, permit or license (collectively, an "Authorization") of
any Governmental Authority, or any material agreement, or other material
instrument, document or understanding, oral or written, to which such party is a
party, by which Seller may have rights or by which any of the Subject Assets may
be bound or affected; or (ii) result in the creation or imposition of any
Encumbrance except Permitted Encumbrances, on the Subject Assets.
No Authorization or other action of, or registration, declaration, recording or
filing with, any Governmental Authority or other person (other than the approval
of the Board of Directors and shareholders of Seller) is required in connection
with the execution and delivery of this Agreement and/or any Ancillary Document
to be executed and delivered pursuant hereto by Seller and/or the consummation
by Seller of the transactions contemplated hereby.
TITLE TO THE SUBJECT ASSETS. Seller has good and valid title to all of the
assets constituting the Subject Assets described in Section 1.1, free and clear
of all Encumbrances except Permitted Encumbrances.
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COMMITMENTS; CUSTOMERS AND VENDORS. To the knowledge of Seller, the Assets
listed on Exhibit 1 are all of the material agreements, arrangements, and other
commitments of the Business with its customers (whether written, oral or
otherwise) which, if not assigned to or assumed by Buyer as an "Assumed
Contract" hereunder, would result in liabilities or obligations of Seller
accruing after the Closing. True and correct copies of each of the contracts and
all amendments and modifications thereof, have been delivered to Buyer. Assuming
that the consent of the customers who are parties to the contracts is obtained
pursuant to consents (as defined in 5.1), all of the contracts are assignable by
Seller.
EACH ASSUMED CONTRACT IS IN FULL FORCE AND EFFECT. To the knowledge of Seller,
Seller has not been made aware of any facts that would suggest that any of the
material contracts within Subject Assets is not valid and binding or enforceable
in accordance with its terms, except as such enforceability may be limited by
bankruptcy and other Laws generally affecting the rights of creditors and
general principles of equity. Except as set forth in Schedule 3, neither Seller
nor, to the knowledge of Seller, any other party to a contract is in breach or
default under any contract (with or without the lapse of time, or the giving of
notice, or both).
BROKERS, AGENTS. Seller has not dealt with any agent, finder, broker or other
representative (other than representatives of Buyer) in any manner which could
result in Buyer being liable for any finder's, broker's or other fee or
commission in connection with the subject matter of this Agreement.
WARRANTIES TRUE AND CORRECT. No representation or warranty by Seller contained
in this Agreement or in any writing to be furnished pursuant hereto contains or
will contain any untrue statement of fact or omits or will omit to state any
material fact required to make the statements herein or therein complete and not
misleading.
Exclusion of Implied Warranties. SELLER EXCLUDES AND DISCLAIMS ANY AND ALL
IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE SUBJECT ASSETS AND EACH
OF THEM. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, SELLER MAKES NO
WARRANTIES TO BUYER IN CONNECTION WITH THE SALE OR TRANSFER OF THE SUBJECT
ASSETS TO SUBSIDIARY OR THE CONDITION OR PROSPECTS OF THE BUSINESS OTHER THAN
THOSE EXPRESSLY SET FORTH IN THIS ARTICLE THREE.
ARTICLE FOUR: WARRANTIES AND REPRESENTATIONS OF BUYER
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Buyer hereby warrants and represents to Seller, which warranties and
representations shall survive the Closing for a period of three years following
Closing, as follows:
CORPORATE MATTERS; NO CONFLICT. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the state where it was
incorporated. Buyer has the authority and power, corporate or otherwise, to
carry on all business activities in the places and in the manner currently
conducted by it. Buyer has the corporate power and authority to enter into this
Agreement and the Ancillary Agreements to be executed and delivered by it and to
consummate the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the Ancillary Agreements by Buyer have been
approved by all necessary corporate action. This Agreement and the Ancillary
Documents to be executed and delivered by Buyer constitute, or in the case of
the Ancillary Documents, upon their execution and delivery by Buyer, will
constitute, valid and legally binding obligations of Buyer, enforceable against
it in accordance with their respective terms except as such enforceability may
be limited by bankruptcy and other Laws generally affecting the rights of
creditors and general principles of equity.
The execution, delivery and performance of this Agreement and the Ancillary
Agreements to be executed and delivered by Buyer, the consummation of the
transactions contemplated hereby, and the compliance herewith, by Buyer: (i)
does not, and will not violate, conflict with or result in the breach of, or
default under, any term, condition or provision of, give rise to any right to
terminate, cancel, modify, accelerate or otherwise change the existing rights or
obligations of such party with respect to, (a) any Laws which is applicable to
Buyer, (b) Order which is applicable to Buyer, (c) the charter documents of
Buyer or any securities issued by Buyer, or (d) any Authorization of any
Governmental Authority, or any agreement, or other instrument, document or
understanding, oral or written, to which Buyer is a party.
8
No Authorization or other action of, or registration, declaration, recording or
filing with, any Governmental Authority or other person is required in
connection with the execution and delivery of this Agreement and/or any
Ancillary Document to be executed and delivered pursuant hereto by Buyer and/or
the consummation by Buyer of the transactions contemplated hereby.
SEC FILINGS; FINANCIAL STATEMENTS
(a) The Parent has made available to the Seller, upon request of
the Seller, accurate and complete copies (excluding copies of
exhibits) of each report, registration statement and
definitive proxy statement filed by the Parent with the
Securities Exchange Commission (the "SEC") between December
31, 2004 and the date of this Agreement (the "Parent SEC
Documents"). As of the time it was filed with the SEC (or, if
amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing): (i) each of the
Parent SEC Documents complied in all material respects with
the applicable requirements of the Securities Act of 1933 or
the Securities Exchange Act of 1934 (as the case may be); and
(ii) none of the Parent SEC Documents contained any untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(b) Between the date of the most recently filed Parent SEC
Document and the date of this Agreement, there has been no
material adverse change in the Parent's affairs that has not
been disclosed in the Parent's SEC Documents, PROVIDED,
HOWEVER, that for purposes of determining whether there shall
have been any such material adverse change, (i) any adverse
change resulting from or relating to worldwide general
business or economic conditions shall be disregarded, (ii) any
adverse change resulting from or relating to conditions
generally affecting the industry in which Parent competes
shall be disregarded, and (iii) any adverse change to the
stock price of the Parent's Common Stock, as quoted on any
nationally recognized stock quotation system, shall be
disregarded.
(c) The consolidated financial statements contained in the
Parent's SEC Documents: (i) complied as to form in all
material respects with the published rules and regulations of
the SEC applicable thereto; (ii) were prepared in accordance
with generally accepted accounting principles applied on a
consistent basis throughout the periods covered, except as may
be indicated in the notes to such financial statements and (in
the case of unaudited statements) as permitted by Form 10-Q of
the SEC, and except that unaudited financial statements may
not contain footnotes and are subject to year-end audit
adjustments; and (iii) fairly present the consolidated
financial position of the Parent and its subsidiaries as of
the respective dates thereof and the consolidated results of
operations of the Parent and its subsidiaries for the periods
covered thereby.
(d) The Parent qualifies as a registrant whose securities may be
resold pursuant to Form S-1 or SB-2 promulgated by the SEC
pursuant to the Securities Act of 1933, as amended.
BROKERS; AGENTS. Buyer has not dealt with any agent, finder, broker or other
representative in any manner which could result in Seller being liable for any
fee or commission in the nature of a finder's or originator's fee in connection
with the subject matter of this Agreement.
WARRANTIES TRUE AND CORRECT. No warranty or representation by Buyer contained in
this Agreement or in any writing to be furnished pursuant hereto contains or
will contain any untrue statement of fact or omits or will omit to state any
material fact required to make the statements therein contained not misleading.
9
ARTICLE FIVE: ADDITIONAL COVENANTS
----------------------------------
5.1 GENERAL Buyer and Seller understand and agree to cooperate on the completion
of comprehensive due diligence, including the preparation of Parent audited
financial statements covering the assets to be purchased and liabilities assumed
for inclusion in a report on Form 8-K to be filed by Parent with the U.S.
Securities and Exchange Commission. Buyer and Seller acknowledge that the
satisfactory completion of due diligence is a condition precedent to the closing
obligation of either party.
5.2 BEST EFFORTS. Buyer shall use its best efforts to obtain within sixty (60)
days after the Closing from each party (other than Seller) to a contract such
customer's written agreement to the assignment of its contract to Buyer, and
Seller shall use its best efforts, together with Buyer, in obtaining all such
Consents. "Best Efforts" means the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to achieve that result as
expeditiously as possible, provided, however, that a Person required to use Best
Efforts under this Agreement will not be thereby required to take actions that
would result in a material adverse change in the benefits to such Person of this
Agreement and the contemplated transactions or to dispose of or make any change
to its business, expend any material funds or incur any other material burden.
5.3 PUBLICITY. Seller (nor any agent or representative of Seller) shall make any
public statements, including any press releases with respect to this Agreement
and/or the transactions contemplated hereby or any of the terms thereof without
the express prior written consent of the Parent, (it being understood that in no
event shall any statement by Seller or Buyer with respect to this Agreement
and/or the transactions contemplated hereby or any of the terms thereof that is
consistent with the communication plan specified by Parent and agreed upon by
the parties and made after the Closing to customers or vendors of the Business
constitute a public statement restricted hereby). Seller understands that Parent
of Buyer is a public company and Parent will issue all public statements
regarding this transaction as well as information releases for all future public
releases.
5.4 COOPERATION. Seller shall cooperate with Buyer and use its best efforts to
cause respective officers, employees, agents, accountants and representatives,
if any, of Seller to cooperate with Buyer after the Closing to facilitate the
orderly transition of the Business and the Subject Assets to Buyer and to
minimize any disruption to the Business that might result from the transactions
contemplated hereby. Without limiting the generality of the foregoing provision,
during the ninety (90) day period commencing on the Closing Date, Seller shall
perform the transition services as reasonably specified by Buyer.
5.5 EXECUTION OF ADDITIONAL DOCUMENTS. From time to time, as and when requested
by Buyer and Seller shall execute and deliver, or cause to be executed and
delivered, all such documents and instruments of conveyance and shall take, or
cause to be taken, all such further or other actions as are necessary to
consummate the transactions contemplated by this Agreement and to convey,
assign, transfer and deliver to Buyer any of the properties or assets intended
to be conveyed, assigned, transferred and delivered pursuant to this Agreement.
5.7 RECORDS. For the five (5) year period commencing on the Closing Date, upon
reasonable notice, Buyer and Seller agree to furnish or cause to be furnished,
during normal business hours, to each other and their respective
representatives, employees, counsel and accountants access to such information
and assistance relating to the Business as is reasonably necessary for financial
reporting and accounting matters, the preparation and filing of any returns,
reports or forms, or the defense of any tax claim or assessment, relating to the
Business; provided, however, that such access does not unreasonably disrupt the
normal operations of Buyer or Seller.
10
ARTICLE SIX: INDEMNIFICATION & POST CLOSING CONDITIONS
------------------------------------------------------
6.1 INDEMNIFICATION OF BUYER. Seller agrees to indemnify Buyer and its
Affiliates and their respective members, managers, shareholders, directors,
officers, employees and agents (collectively, the "Buyer Indemnified Parties")
against, and to hold each such person harmless from, any and all damages,
losses, deficiencies, actions, demands, judgments, diminution in value, costs
and expenses (including reasonable attorneys' and accountants' fees)
(collectively, "Losses") of or against such person resulting from (i) any
misrepresentation or breach of warranty on the part of Seller in this Agreement
or in any Ancillary Agreement; (ii) any breach or non-fulfillment of any
agreement or covenant contained herein or in any Ancillary Agreement on the part
of Seller; (iii) any failure of Seller to pay and/or perform any liabilities or
obligations of Seller or the Business (including the Specified Retained
Liabilities and any such liability arising by operation of law) other than the
Assumed Liabilities; and (iv) any claims and liabilities to the extent related
to both (A) Seller's operation of the Business and (B) periods or occurrences
prior to the Closing or, as Seller's operation of the Business relates to an
Assumed Contract, prior to the deferred transfer date, if any, applicable to
such Restricted Material Contract. For purposes hereof, "Affiliate" shall mean,
as to any person, any other person which, directly or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control
with, such person.
6.2 INDEMNIFICATION OF SELLER. Buyer agrees to indemnify Seller and its
Affiliates and their respective members, managers, shareholders, directors,
officers, employees and agents (collectively, the "Seller Indemnified Parties")
against, and to hold each such person harmless from, any and all damages,
losses, deficiencies, actions, demands, judgments, diminution in value, costs
and expenses (including reasonable attorneys' and accountants' fees)
(collectively, "Losses") of or against such person resulting from (i) any
misrepresentation or breach of warranty on the part of Buyer in this Agreement
or in any Ancillary Agreement; (ii) any breach or non-fulfillment of any
agreement or covenant contained herein or in any Ancillary Agreement on the part
of Buyer; (iii) any failure of Buyer to pay and/or perform any liabilities or
obligations of Buyer or the Business (including the Specified Retained
Liabilities and any such liability arising by operation of law) other than the
Assumed Liabilities; and (iv) any claims and liabilities to the extent related
to both (A) Buyer's operation of the Business and (B) periods or occurrences
prior to the Closing or, as Buyer's operation of the Business relates to an
Assumed Contract, prior to the deferred transfer date, if any, applicable to
such Restricted Material Contract. For purposes hereof, "Affiliate" shall mean,
as to any person, any other person which, directly or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control
with, such person.
6.3 PROCEDURE RELATIVE TO INDEMNIFICATION. The following procedure shall govern
indemnification: (a) If either party hereto shall claim that it is entitled to
be indemnified pursuant to the terms of this Article Six, it (the "Claiming
Party") shall so notify Seller in the case of a claim for indemnification
hereunder (a "Claim") by any Claiming Party who or which is a Buyer Indemnified
Party or Buyer in the case of a Claim by a Claiming Party who or which is a
Seller Indemnified Party (the "Indemnifying Party") in writing of such claim
promptly within ninety (90) days after receipt of a notice of such claim or
notice of any claim of a third party that may reasonably be expected to result
in a claim by the Claiming Party against the Indemnifying Party except that
notice shall be given to the Indemnifying Party within such earlier period of
time as may be reasonably necessary to allow the Indemnifying Party to respond
to any pleading or other document for which a timely response is required;
provided, however, that failure to timely give such notification shall not
affect the indemnification provided hereunder except to the extent the
Indemnifying Party shall have been actually prejudiced as a result of such
failure. Such notice shall specify the breach of representation, warranty, or
agreement claimed by the Claiming Party and the Losses incurred by, or imposed
upon, the Claiming Party on account thereof. If such Losses are liquidated in
amount, the notice shall so state and such amount shall be deemed the amount of
the Claim of the Claiming Party. If such Losses are not liquidated in amount,
the notice shall so state and, in such event, a Claim shall be deemed asserted
against the Indemnifying Party by the Claiming Party, but no payment shall be
made on account thereof until the amount of such Claim is liquidated and the
Claim is finally determined. In the case of a Claim other than one which is
based upon a Proceeding by any third party, including any Proceeding by any
Governmental Authority (a "Third Party Claim"), if the Indemnifying Party agrees
with such Claim for indemnification, it shall remit payment for the amount of
such Claim promptly after receipt from the Claiming Party of the notice and
invoice therefore. In the event of a dispute, the Claiming Party and the
Indemnifying Party shall proceed in good faith and attempt to negotiate a
resolution of such dispute, and if not resolved through negotiations, such
dispute shall be resolved by litigation in an appropriate court of competent
jurisdiction.
11
(b) The following provisions shall apply to any Claim of the Claiming Party that
is based upon a Third Party Claim:
(1) The Indemnifying Party shall, upon receipt of such written notice and at its
expense, defend such Third Party Claim in its own name or, if necessary, in the
name of the Claiming Party. The Claiming Party will cooperate with and make
available to the Indemnifying Party such assistance and materials as may be
reasonably requested of it and the Claiming Party shall have the right, at its
expense, to participate in such defense. The Indemnifying Party shall have the
right to settle and compromise such Third Party Claim only with the consent of
the Claiming Party, which consent shall not be unreasonably withheld; provided,
however, that, in making its determination as to whether to grant such consent,
the Claiming Party shall be entitled to consider the impact of the proposed
settlement upon its reputation and/or the goodwill of the businesses which it
conducts.
(2) If the Indemnifying Party shall notify the Claiming Party that it disputes
any Claim made by the Claiming Party with respect to, and/or it shall refuse or
choose not to conduct a defense against, such Third Party Claim, then the
Claiming Party shall have the right to conduct a defense against such Third
Party Claim and shall have the right to settle and compromise such Third Party
Claim without the consent of the Indemnifying Party. Once the amount of such
Claim is liquidated and the Claim is finally determined, the Claiming Party
shall be entitled to pursue each and every remedy available to it at law or in
equity to enforce the indemnification provisions of this Article Six and, if it
is determined, or the Indemnifying Party agrees, that it is obligated to
indemnify the Claiming Party for such Claim, the Indemnifying Party agrees to
pay all costs, expenses and fees, including all reasonable attorneys' fees,
which may be incurred by the Claiming Party in attempting to enforce
indemnification under this Article Six, whether the same shall be enforced by
suit or otherwise.
6.4 POST CLOSING CONDITIONS.
6.4.1 BUYER'S OBLIGATIONS TO SELLER Following the Closing, Buyer shall have the
ongoing obligations and duties to Seller concerning the operations of Subsidiary
set forth below.
(1) Subsidiary will be domiciled and operated from League City, Texas,
unless otherwise agreed to in writing by both Parent and Seller Representative.
(2) Seller shall be granted an exclusive right to provide commission
only sales of wireless broadband services in support of Purchaser in a territory
that will initially include the area of coverage of the existing Seller network
and may be expanded by mutual agreement of Purchaser and Seller to a coverage
area bounded on the east by I-45, on the north by I-59 and on the west by SR 87.
Seller will maintain this exclusive right to commission sales for Purchaser in
the territory until December 31, 2008 as long as Seller provides a minimum of
thirty new account customer sales per month or an average of 90 customers per
any consecutive 3 months at Purchaser's standard rates. Should Seller fail to
meet this minimum number of new sales in any given month following Closing,
Seller may continue to sell on a commission basis but Purchaser reserves the
right to also sell by other means in the territory. The amount of the commission
to Seller on any new account sale will be one months revenue and will be paid
net 30 days following the installation and activation of the account.
6.4.2 SELLERS OBLIGATIONS TO BUYER. Following the Closing, Seller shall
have the ongoing obligations and duties to Buyer concerning the operations of
Subsidiary set forth below.
(1) Following the Closing, the operation of Seller will be focused on
commission only sales of wireless broadband services aspects of the business and
all implementation, support and operations, including "shared service " aspects
of the Business will be provided by Parent to Subsidiary as a support function
in order to reduce costs and achieve economies of scale. Examples of such shared
services include, but are not limited to, (1) administrative financial
transactions such as billing, collections, purchase orders, payments,
accounting, etc. (2) administrative matters related to personnel, such as
payroll, insurance, stock plans and 401K plan, when implemented. (3) legal, tax,
leasing, public releases, investor relations, and human relations functions.
(2) Parent operates a network operations center (NOC) at Parent's
League City facility that will serve as the primary NOC for the acquired
business operations. After suitable testing, training, integration planning and
staffing the League City NOC will become the primary NOC for the Seller's ISP
wireless broadband networks and the Seller's NOC will become a backup NOC if
deemed to be required by Purchaser.
12
ARTICLE SEVEN: MISCELLANEOUS
----------------------------
7.1 EXPENSES. The parties hereto shall pay their own expenses, including
accountants' and attorneys' fees, incurred in connection with the negotiation
and consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements. Buyer shall be liable for and shall pay and discharge when
due any sales or transfer taxes incurred in connection with the purchase and
sale of the Subject Assets pursuant to this Agreement.
7.2 HEADINGS; USE OF CERTAIN WORDS. The headings in this Agreement are for
purposes of convenience and ease of reference only and shall not be construed to
limit or otherwise affect the meaning of any part of this Agreement. Unless the
context clearly otherwise requires, as used herein, the term "Agreement" shall
mean this Agreement, including the Exhibits attached hereto. The words "herein,"
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular Article, Section or other
subdivision, and, except as expressly provided otherwise herein, references
herein to Articles or Sections or Schedules or Exhibits shall mean the Articles
and Paragraphs hereof and the Schedules and Exhibits attached hereto. The use of
the neuter pronoun "it" shall also refer as appropriate to the masculine and/or
feminine gender, and vice versa. The use of the singular herein shall, where
appropriate, be deemed to include the plural and vice versa. As used herein, the
word "person" refers to any individual, corporation limited liability company,
partnership, trust, Governmental Authority or other organization or entity. As
used herein, the term "including" shall mean "including, without limitation. For
those warranties and representations set forth in Article Three which are
subject to the qualification "to the Knowledge of Seller" or similar language,
Seller shall be deemed to have knowledge of a matter if any executive officer
has knowledge of the matter. For those warranties and representations set forth
in Article Four which are subject to the qualification "to the Knowledge of
Buyer" or similar language, Buyer shall be deemed to have knowledge of a matter
if any executive officer has knowledge of the matter.
7.3 NOTICES. All notices or other communications required or permitted to be
given hereunder shall be in writing and shall be considered to be given and
received in all respects when personally delivered, when sent by facsimile
transmission actually received by the receiving equipment, when sent by
reputable express or courier delivery service, delivery charges prepaid, or
three (3) days after being deposited in the United States mail, certified mail,
postage prepaid, return receipt requested, addressed as set forth on the
signature page, or to such other address as shall be designated by the addressee
by notice duly given in accordance herewith.
7.4 ASSIGNMENT. This Agreement and the rights hereunder shall not be assignable
or transferable by Buyer or Seller prior to the Closing without the prior
written consent of the other party hereto.
7.5 BINDING EFFECT. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective legal representatives, heirs,
beneficiaries, successors and permitted assigns. Nothing expressed or implied in
this Agreement is intended or shall be construed to confer upon or give any
person other than the parties hereto and their permitted successors or assigns
any rights or remedies under or by reason of this Agreement or any transaction
contemplated hereby.
7.6 ENTIRE AGREEMENT; AMENDMENT OR WAIVER; CUMULATIVE REMEDIES. This Agreement,
the Schedules and Exhibits attached hereto and the agreements executed and
delivered in connection herewith constitute the entire agreement between the
parties hereto relating to the subject matter hereof, and all prior agreements,
correspondence, discussions, negotiations, agreements and understandings of the
parties (whether oral or written) are merged herein and superseded hereby. No
amendment, modification, or waiver hereto or hereunder shall be valid unless in
writing signed by an authorized signatory of each party to be affected thereby
against whom enforcement thereof is being sought. The failure of any party
hereto to enforce at any time any of the provisions of this Agreement shall in
no way be construed to be a waiver of any such provision, nor in any way to
affect the validity of this Agreement or any part hereof or the right of such
party thereafter to enforce each and every such provision. No waiver of any
breach of, or failure to comply with, this Agreement shall be held to be a
waiver of any other or subsequent breach or failure to comply. All rights and
remedies under this Agreement are cumulative to all other rights and remedies
that may be available to each party, including all rights and remedies, whether
in tort or otherwise, whatsoever at law or in equity with respect hereto, which
each party hereby expressly reserves.
13
7.7 SEVERABILITY. The parties agree that if any provision of this Agreement
shall under any circumstances be deemed invalid or inoperative, this Agreement
shall be construed with the invalid or inoperative provision deleted, and the
rights and obligations of the parties shall be construed and enforced
accordingly.
7.8 APPLICABLE LAW. This Agreement in all respects, including as to its
validity, interpretation, enforcement and effect, shall be governed by the
internal Laws of the State of Texas without regard to the Laws which otherwise
would govern under principles of conflicts of laws thereof.
7.9 COUNTERPARTS. This Agreement may be executed in one or more counterparts,
all of which shall be considered but one and the same agreement, and shall
become effective when one or more such counterparts have been signed by each of
the parties and delivered to the other party.
7.10 REPRESENTATIVE OF SELLER. Seller hereby constitutes and appoints Xxxxx
Xxxxxxxxx as their representative ("Seller Representative") and their true and
lawful attorney in fact, with full power and authority in each of their names
and on behalf of each of them to act on behalf of Seller in the absolute
discretion of the Seller Representative, but only with respect to the following
provisions of this Agreement, with the power to:
(a) act pursuant to Section 1.5 with respect reviewing and approving
any repayment obligations necessary to comply the payment obligations for
shortfalls resulting from accounts receivable transferred and that are
sufficient to offset the liabilities assumed in items 1.5 (iii), (vii), and
(viii); and
(b) in general, to do all things and to perform all acts, including
executing and delivering all agreements, certificates, receipts, instructions
and other instruments contemplated by or deemed advisable to effectuate the
provisions of this Section 7.10.
This appointment and grant of power and authority is coupled with an interest
and is in consideration of the mutual covenants made herein and is irrevocable
and shall not be terminated by any act of Seller or by operation of law. Seller
hereby consents to the taking of any and all actions and the making of any
decisions required or permitted to be taken or made by the Seller Representative
pursuant to this Section 7.10. Seller agrees that the Seller Representative
shall have no obligation or liability to any Person for any action or omission
taken or omitted by the Seller Representative in good faith hereunder, and
Seller shall indemnify and hold the Seller Representative harmless from and
against any and all loss, damage, expense or liability (including reasonable
counsel fees and expenses) which the Seller Representative may sustain as a
result of any such action or omission by the Seller Representative hereunder.
14
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day,
month and year first above written.
BUYER
ERF Wireless, Inc., a Nevada corporation
("Parent")
By: /s/ Dr. H. Xxxx Xxxxxx
-----------------------------------------
Name: Dr. H. Xxxx Xxxxxx
Title: Chief Executive Officer
ERF Wireless Bundled Services, Inc. a Texas
corporation ("Subsidiary")
By: /s/ R. Xxxx Xxxxx
-----------------------------------------
Name: R. Xxxx Xxxxx
Title: Chief Financial Officer
Send Notices to:
----------------
Mr. R. Xxxx Xxxxx, CFO
ERF Wireless, Inc.
0000 Xxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxx Xxxx, XX 00000
Telephone 000.000.0000
Facsimile 281.538.2155
Email xxx@xxxxxxxxxxx.xxx
SELLER
NetYeti, Inc.
By: /s/ Xxxxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Title: President
Send Notices to:
----------------
Xxx. Xxxxxxxx X. Xxxxxxxxx
PRESIDENT
NetYeti, Inc.
000 Xxxxxxx Xxx
Xxxx Xxxxxxx, Xxxxx 00000
Via Email: Xxxxx@xxxxxx-xxx.xxx
15
