EX-10.1
MASTER
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") dated this 31st March 2003,
among Telecommunication Products, Inc., a Colorado corporation ("Buyer"); and
Coast Communications Inc. a Nevada corporation, ("Seller"); hereinafter referred
to, collectively, as the "Parties."
RECITALS
Buyer is fully SEC reporting publicly traded, trading under the symbol "TCPD"
organized in Colorado engaged in the business of videoconferencing, developing
and providing video on demand systems and otherwise exploiting the internet and
communication based data systems.
Seller is a privately held corporation organized under the laws of the State of
Nevada, and is in the business of providing Pay per View and Cable Services
("Services") to the hospitality industry, with approximately 8,000 rooms under
contract and inventory assets to build an additional thirty to forty thousand
Pay Per View rooms.
WITNESSETH:
WHEREAS, Buyer desires to purchase from Seller and Seller desires to sell to
Buyer, on the terms and subject to the conditions of this Agreement, certain
assets and business of Seller:
THEREFORE, in consideration of the mutual covenants, agreements, representations
and warranties contained in this Agreement, the parties agree as follows:
ARTICLE 1. TRANSFER OF ASSETS
Subject to the terms and conditions set forth in this Agreement, Seller agrees
to sell, convey, transfer, assign and deliver to Buyer, and Buyer agrees to
purchase from Seller at the Closing described in Article 3 hereof, all of the
assets, properties and business of Seller relating to pay-per-view and cable
services to hotel/lodging rooms, including the corporation Hotel Movie Network
Inc. a Nevada corporation, character and description, whether tangible,
intangible, real, personal or mixed, and wherever located but excluding any
assets specifically excluded in the following Sections of this Article 1), all
of which are sometimes collectively referred to in this Agreement as the
"Assets," including, but without limitation to, the following:
1.1 Contracts. All of the contracts and contract rights related to the
agreements for pay-per-view and cable services to hotel/lodging rooms,
which agreements are listed in SCHEDULE 1.1 attached hereto (hereinafter
referred to as the "Contracts").
1.2 Equipment. All the equipment (including essential replacement parts) and
other tangible personal property of every kind and description wherever
they may be located that are owned or leased by Seller, and are utilized in
connection with Seller's operations, a current list of which is attached
hereto as Schedule 1.2 (hereinafter referred to collectively as the
"Equipment"). At the Closing, Seller shall deliver to Buyer the equipment
as set forth in Schedule 1.2, or appropriate documents transferring the
ownership of the Equipment, free of any claim or encumbrance. Good and
marketable title to all such equipment shall be transferred on delivery,
free and clear of any encumbrances. Within 30 days of the Closing, Seller
will supplement Schedule 1.2 with serial numbers of the equipment located
at the hotels, which are subject to the contracts listed in Schedule 1.1.
1.3 Intangibles. All trade names (excluding "Coast Communications Inc., Alpha
Broadcasting Communications and their non-hospitality operations and
assets"), of Hotel Movie Network Inc. its trademarks, service marks,
copyrights, patents, patent rights, trade secrets, technical know-how,
goodwill and other intangibles including (i) tort or insurance proceeds
arising out of any damage or destruction of any of the Assets between the
date of this Agreement and the Closing Date (as hereinafter defined); (ii)
all contracts to be assumed by Buyer pursuant to Article 4 used by Seller
in (or owned by Seller and useful in) the operation of the business, but
excluding accounts receivable, accounts payable, contracts not assumed by
Buyer pursuant to Article 4, bank accounts, and tax deposits;
1.4 Books and records. All papers and records in Seller's care, custody or
control relating to any or all of the above-described Assets and the
operation thereof, including, but not limited to, all blueprints and
specifications, personnel and labor relations records, environmental
control records, sales records, accounting and financial records,
maintenance and production records; and
1.5 Other Assets. All product rights in the equipment and all improvements
thereon. All prepaid expenses relating to any of the
Assets and the operation of Seller's business sold pursuant to this Agreement.
ARTICLE 2. PURCHASE PRICE
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2.1 Payment of Purchase Price. In consideration for the transfer and assignment
by Seller of the Assets, and in consideration of the representations,
warranties and covenants of the Seller set forth herein, Buyer on the
conditions set forth herein and subject to the provisions in Article 9
state that:
(a) The Buyer shall pay to the Seller a total sum of $150,000 cash according to
the following terms:
(i) $75,000 at signing of contract.
(ii) $75,000 within 30 days of contract signature.
(b) Buyer shall issue 2, 000,000 shares of Buyer's restricted common stock
(hereinafter referred to as the "Shares") to the Seller at the time of
signing based upon an estimated value of $0.20 per share to be held
subject to Rule 144 restrictions and the Investment Representation
Letter and Lock -Up Agreement attached hereto as Exhibit "B". Piggyback
registration rights, if any, to be available pari passu to other
insiders if approved by Buyer's Board of Directors.
The shares will be included in an SB2 registration statement and attain
free trading status. The registration will be made on or before December
15th 2003.
(c) One Million (1,000,000) Buyer Series A Preferred shares, valued at
$1.00 per share, which may be converted, subject to certain terms and
conditions into Buyer common shares stock two (2) years from the date
of issuance. It is agreed and understood between the Parties that Buyer
shall have the right to redeem the Series A Preferred stock at anytime
prior to conversion into common stock upon a mutual agreement by both
parties as to the value of said stock. Should a mutually acceptable
agreement not be reached within such option period, and then the option
to convert to common shares shall be with the Seller shareholders only.
(d) Buyer shall issue sufficient Buyer Series B Preferred shares to Seller
to approximately equal the net worth of the Acquired Assets, of ($ 3.5
million) less the $1,550,000 valuation attributable to sub-sections
(a)-(c) above which is secured by the issuance of two (2) promissory
notes which are set forth as Exhibits "C" and "D" as assurance for the
valuations attributable herein. This Series B Preferred Stock shall be
convertible into restricted shares Buyer common stock commencing two
years from the date of issuance at the rate of fifty per cent (50%)
per annum at a agreed to value of $2.00 per share for the first year
and $3.00 per share for the second year subsequent to the Closing
Date. Buyer shall have the right to redeem the Series B Preferred
stock at anytime prior to conversion into Buyer common stock upon an
agreement by all Parties as to the value of said stock. Should the
Parties not reach an acceptable agreement hereto then the option to
convert to common shares shall be with the Sellers shareholders only
all common shares issued or preferred converted to common shares may
not be sold in the open market more than 10,000 in one day or 40,000
in 1week without TCPD, s written approval.
(e) If the buyer is unable to complete 2.1(a (ii)) or 2.1(b) registration,
at the sellers option this agreement may be voided with the buyer
forfeiting any cash payment and stock listed in 2.1(b).
2.2 Payment in Immediately Available Funds. The Purchase Price set forth in
Section 2.1 shall be paid in immediately available funds, either by
cashier's check or by wire transfer, on terms and conditions
satisfactory to the recipient thereof or in the form of stock and
promissory notes as the case may be.
2.3 Sales and Transfer Taxes. Seller shall be responsible for the payment of
any sales or transfer taxes associated with the transfer of the Acquired
Assets to Buyer.
(c) Buyer shall assume and discharge, and shall indemnify Seller against,
liabilities and obligations of the Seller under the contracts or other
agreements, if any as specified on SCHEDULE 1.1, but only to the extent
that such liabilities or obligations accrue on or after the Closing Date.
Buyer grants to Seller, to secure payment and performance of the obligations of
Seller under this Agreement, a security interest in the contracts, equipment and
inventory listed in SCHEDULES 1.1 and SCHEDULES 1.2 and all subsequent additions
to Hotel Movie Network its successors or assigns.
Time periods, registration rights and conversion rights will be convertible at
the Seller option to any pervious and or subsequent acquisitions, equity
investments and/or investments in or for the Buyer.
ARTICLE 3. THE CLOSING
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The closing of the purchase and sale of the Assets by Seller to Buyer (the
"Closing") shall take place at the offices of Hotel Movie Network, which are
located at 0000 X. Xxxx Xxxxx Xxxx, Xxxxxxx 00000, on or before 10:00 AM local
time, on March 31st, 2003, or at such other place and/or time as the parties may
agree in writing (the "Closing Date"). In the event that the conditions
specified in this Agreement have not been fulfilled by such date, Buyer may
extend the Closing Date for a period or periods not exceeding an aggregate of 30
days by giving written notice to the Seller.
Buyer shall perform its due diligence inspection of Sellers; equipment,
properties, contracts and all other items reasonably necessary to complete the
inspection on or before the Closing Date of closing set forth above.
3.1 Sellers Obligations at the Closing. At the Closing, Sellers shall deliver
or cause to be delivered to Buyer:
(a) instruments of assignment and transfer of all of the Assets of
Seller to be transferred hereunder, in form and substance
satisfactory to Buyer's counsel;
(b) instruments of assignment and transfer of all contracts being
transferred by seller to buyer as outlined in SCHEDULE 1.1.
(c) the certificate of the President or Secretary of the Seller confirming
that proper minutes and resolutions of the Seller's Board of Directors
and Shareholders have been secured prior to the Closing whereby the
sale of the Assets has been approved.
Simultaneously with the consummation of the transfer, Seller, through its
officers, agents, and employees, shall put Buyer into full possession and
enjoyment of all the Assets to be conveyed and transferred by this Agreement.
Seller, at any time before or after the closing Date, shall execute,
acknowledge, and deliver any further assignments, conveyances and other
assurances, documents and instruments of transfer, reasonably requested by Buyer
and shall take any other action consistent with the terms of this Agreement that
may reasonably be requested by Buyer for the purpose of assigning, transferring,
granting, conveying and confirming to Buyer, or reducing to possession, any or
all property and assets to be conveyed and transferred by this Agreement. If
requested by Buyer, Seller further agree to prosecute or otherwise enforce in
their own names for the benefit of Buyer any claims, rights, or benefits that
are transferred to Buyer by this Agreement and that require prosecution or
enforcement in either of the Sellers name. Any prosecution or enforcement of
claims, rights, or benefits under this Section shall be solely at Buyer's
expense; unless Seller make the prosecution or enforcement necessary by breach
of this Agreement.
3.2 Buyer's Obligations at Closing. Subject to the provision of Article 9, at
the Closing, Buyer shall deliver to Seller the following instruments and
documents against delivery of the items specified in Section 3.1:
a) Buyer Stock Certificates issued in the name of Coast
Communications Inc. for 2, 000,000 shares of restricted common
stock; One Million (1,000,000) Buyer Series A Preferred shares,
Buyer shall issue sufficient Buyer Series B Preferred shares to
Seller to approximately equal the net worth of the Acquired
Assets, of ($ 3.5 million) less the $1,550,000
b) the certificate of the President or Secretary of the Buyer
confirming that proper minutes and resolutions of the Buyer's
Board of Directors have been secured prior to the Closing whereby
the purchase of the Assets has been approved.
ARTICLE 4. ASSUPTION OF LIABILITIES
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Buyer is not assuming any debt, liability or obligation of Seller, except the
current accounts payable of Hotel Movie Network at the closing date, whether
known or unknown, fixed or contingent excepts as herein specifically otherwise
provided. Seller agree to indemnify and hold Buyer harmless against all debts,
claims, liabilities and obligations of Seller not expressly assumed by Buyer
hereunder, and to pay any and all attorneys fees and legal costs incurred by
Buyer, its successors and assigns in connection therewith. Buyer shall have the
benefit of and shall perform all contracts and commitments if any specifically
disclosed in SCHEDULE 1.1, in accordance with the terms and conditions thereof,
except to the extent modifications are specifically disclosed on such SCHEDULE
1.1.
ARTICLE 5. EXCISE AND PROPERTY TAXES
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Seller shall pay all sales, use and transfer taxes arising out of the transfer
of the Assets and shall pay its portion, prorated as of the Closing Date, of
state and local personal property taxes of the business. Buyer shall not be
responsible for any business, occupation, withholding or similar tax, or for any
taxes of any kind related to any period before the Closing Date.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF SELLER
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Seller, hereby represent and warrant to Buyer that the following facts and
circumstances are, and except as contemplated hereby, at all times up to the
Closing Date will be true and correct, and hereby acknowledge that such facts
and circumstances constitute the basis upon which Buyer is induced to enter into
and perform this Agreement. Each warranty set forth in this Article 6 shall
survive the Closing and any investigation made by or on behalf of Buyer.
6.1 Organization. Good Standing and Qualification. Seller is a corporation duly
organized, validly existing, and in good standing under tile laws of
Nevada, has all necessary corporate powers to own its properties and to
carry on its business as now owned and operated by it, and is duly
qualified to transact interstate business and is in good standing in all
jurisdictions in which the nature of its business or of its properties
makes such qualification necessary.
6.2 Capital Structure. The authorized number of shares of Seller is 2.5
million, all of one class, of which 2.5 million shares (the "Shares") are
issued and outstanding, all of which are owned of record and beneficially
by the Shareholders. All the Shares are validly issued, fully paid, and
nonassessable. There are no outstanding subscriptions, options, rights,
warrants, convertible securities, or other agreements or commitments
obligating Seller to issue or to transfer from treasury any additional
shares.
6.3 Financial Statements. SCHEDULE 6.3 to this Agreement sets forth the
unaudited balance sheet of Seller, which can be audited by the buyer as of
November 1, 2002 for the period of January 1, 2003 until such date, as
compiled by Seller. The balance sheet in SCHEDULE 6.3 is referred to as the
"Financial Statements." The Financial Statements fairly present the
financial position of Seller as of the date of the balance sheet included
in the Financial Statements.
6.4 Absence of Specified Changes Since the December 1, 2002 date of the
Financial Statements, there has not been any:
(a) transaction by Seller except in the ordinary course of business as
conducted on that date;
(b) capital expenditure by Seller exceeding $10,000.00;
(c) material adverse change in the financial condition, liabilities, assets,
business or prospects of Seller;
(d) destruction, damage to, or loss of any assets of Seller (whether or not
covered by insurance) that materially and adversely affects the financial
condition, business or prospects of Seller;
(e) labor trouble or other event or condition of any character materially and
adversely affecting the financial condition, business, assets or prospects
of Seller;
(f) change in accounting methods or practices (including, without limitation,
any change in depreciation or amortization policies or rates) by Seller;
(g) revaluation by Seller of any of its assets;
(h) sale or transfer of any asset of Seller, except in the ordinary course of
business;
(i) execution, creation, amendment or termination of any contract, agreement or
license to which Seller is a party;
(j) loan by Seller to any person or entity, or guaranty by Seller of any loan;
(k) waiver or release of any right or claim of Seller, except in the ordinary
course of business;
(l) mortgage, pledge or other encumbrance of any asset of Seller;
(m) other event or condition of any character that has or might reasonably have
a material and adverse effect on the financial condition, business, assets
or prospects of Seller; or
(n) agreement by Seller to do any of the things described in the preceding
clauses (a) through (m).
6.5 Tax Returns and Audits. Within the times and in the manner prescribed by
law, Seller has filed all domestic and foreign, federal, state and local
tax returns required by law and has paid all taxes, assessments and
penalties due and payable. There are no present disputes as to taxes of any
nature payable by Seller.
6.6 Inventories. No items included in the Seller's inventories have been
pledged as collateral or are held by the Seller on
consignment from others.
6.7 Other Tangible Personal Property. The Equipment described in Section 1.2
and SCHEDULE 1.2 of this Agreement constitutes all the items of tangible
personal property owned by, in the possession of, or used by Seller in
connection with the business sold pursuant to this Agreement. The
Equipment listed in SCHEDULE 1.2 constitutes all tangible personal
property necessary for the conduct by Seller of the business as now
conducted.
The equipment inventory listed on the first six pages of SCHEDULE 1.2 is
new equipment, or is used equipment in good condition and repair; and is
sufficient in kind and quality for the installation of fully operational
pay-per-view services and operations, for not less than 30,000 hotel rooms
(in not more than 200 hotels) at an additional cost of material and labor
of not more than $80 per room
No Equipment used by Seller in connection with its business to be sold
pursuant to this agreement is held under any lease, security agreement,
conditional sales contract, or other title retention or security
arrangement.
6.8 Trade Names Trademarks and Copyrights. Except as set forth in SCHEDULE 6.8,
Seller does not use any trademark, service xxxx, trade name or copyright in
its business to be sold pursuant to this Agreement, or own any trademarks,
trademark registrations or applications, trade names, service marks,
copyrights, or copyright registrations or applications. No person (other
than Seller) owns any trademark, trademark registration or application,
service xxxx, trade name, copyright, or copyright registration or
application, the use of which is necessary or contemplated in connection
with the performance of any of the Contracts.
6.9 Title to Assets. Seller has good and marketable title to all of the Assets
and interests in Assets, whether personal, tangible, and intangible, which
constitute all the Assets and interests in assets that are used in the
business of Seller to be sold pursuant to this Agreement. All the Assets
are free and clear of mortgages, liens, pledges, charges, encumbrances,
equities, claims, easements, rights of way, covenants, conditions, or
restrictions, (i) the lien of current taxes not yet due and payable; and
(ii) possible minor matters that, in the aggregate, are not substantial in
amount and do not materially detract from or interfere with the present or
intended use of any of the Assets, nor materially impair business
operations. All tangible personal property of Seller is in good operating
condition and repair, ordinary wear and tear excepted. Except as set forth
on the appropriate SCHEDULE listing such Assets, neither any officer, nor
any director or employee of Seller, nor any spouse, child or other relative
of any of these persons, owns, or has any interest, directly or indirectly,
in any of the personal property owned by or leased to Seller or any
copyrights, patents, trademarks, trade names or trade secrets licensed by
Seller for use in the business to be sold pursuant to this Agreement.
Seller does not occupy any real property in violation of any law,
regulation or decree.
6.10 Customers and Sales. SCHEDULE 1.1 to this Agreement is a correct and
current list of all customers of Seller for the business to be sold
pursuant to this Agreement. Seller has no information and is not aware of
any facts indicating that any of these customers intend to cease doing
business with Seller or materially alter the amount of the business that
they are presently doing with Seller.
6.11 Insurance Policies. SCHEDULE 6.11 to this Agreement is a description of all
insurance policies held by Seller concerning the Assets. All these policies
are in the respective principal amounts set forth in SCHEDULE 6.11, Seller
has maintained and now maintains (i) insurance on all the Assets of a type
customarily insured, covering property damage and loss of income by fire or
other casualty, and (ii) adequate insurance protection against all
liabilities, claims, and risks against which it is customary to insure.
6.12 Other Contracts. Except as set forth in SCHEDULE 1.2, the Assets are not
bound by any distributor's or manufacturer's representative or agency
agreement, any agreement not entered into in the ordinary course of
business, any indenture, mortgage, deed of trust, lease or any agreement
that is unusual in nature, duration or amount. The performance by Buyer of
any of the agreements described on SCHEDULE 1.1 will not result in Buyer
becoming bound or liable under any distributor or manufacturer's
representative or agency agreement. All contracts, which will be assigned
to or assumed by Buyer under this Agreement, are valid and binding upon the
parties thereto. There is no default or event that with notice or lapse of
time, or both, would constitute default by any party to any of the
agreements listed in SCHEDULE 1.1. Seller has not received notice that any
party to any of the agreements listed in SCHEDULE 1.1 intends to cancel or
terminate any of these agreements or to exercise or not exercise any
options under any of these agreements. Seller is not a party to, nor is
Seller or the Assets bound by, any agreement that is materially adverse to
the business, property, or financial condition of Seller.
6.13 Compliance with Laws. Seller has complied with, and is not in violation of,
applicable federal, state or local statutes, laws and regulations
(including, without limitation, any applicable environmental, health,
building, zoning or other law, ordinance or regulation) affecting the
Assets or the operation of its business to be sold pursuant to this
Agreement.
6.14 Litigation. Except as set forth in SCHEDULE 6.14, there is no suit, action,
arbitration or legal, administrative or other proceeding, or governmental
investigation pending, or to the best knowledge of Seller, threatened,
against or affecting Seller, or any of its business, assets or financial
condition. Seller is not in default with respect to any order, writ,
injunction or decree of any federal, state, local or foreign court,
department, agency or instrumentality. Except as set forth in Schedule
6.14, Seller is not presently engaged in any legal action to recover moneys
due to it or damages sustained by it.
6.15 Assets Sufficient for Conduct of Business. The Assets constitute all of the
assets required for Buyer to conduct the business of
Seller as it is presently conducted.
6.16 Agreement will Not Cause Breach or Violation. Neither the entry into this
Agreement nor the consummation of the transactions contemplated hereby will
result in or constitute any of the following: (i) a breach of any term or
provision of this Agreement; (ii) a default or an event that, with notice
or lapse of time, or both, would be a default, breach or violation of the
Articles of Incorporation or Bylaws of Seller or any lease, license,
promissory note, conditional sales contract, commitment, indenture,
mortgage, deed of trust or other agreement, instrument or arrangement to
which Seller is a party or by which Seller or the Assets are bound; (iii)
an event that would permit any party to terminate any agreement or to
accelerate the maturity of any indebtedness or other obligation of Seller;
(iv) the creation or imposition of any lien, charge or encumbrance on any
of the Assets; or (v) the violation of any law, regulation, ordinance,
judgment, order or decree applicable to or affecting Seller or the Assets.
6.17 Authority and Consents. Seller has the right, power, legal capacity and
authority to enter into, and perform its obligations under this Agreement,
and no approvals or consents of any persons or entity other than Seller are
necessary in connection with it. The execution and delivery of this
Agreement by Seller have been duly authorized by all necessary corporate
action of Seller (including any necessary action by Seller's security
holders), and this Agreement constitutes a legal, valid and binding
obligation of Seller enforceable in accordance with its terms.
6.18 Interest in Customers. Suppliers and Competitors. Neither the Seller, nor
any officer, director or employee of any of the Seller, nor any spouse or
child of any of them has any direct or indirect interest in any competitor,
supplier or customer of Seller or in any person with whom Seller is doing
business in the pay-per-view and cable services to hotel/lodging rooms
business to be sold pursuant to this Agreement.
6.19 Corporate Documents. Seller has furnished to Buyer for its examination (i)
copies of the Articles of Incorporation and Bylaws of Seller and (ii) the
minute books of Seller containing all records required to be set forth of
all proceedings, consents, actions and meetings of the shareholders and
board of directors of Seller to consummate the transaction described in
this business.
6.20 Documents Delivered. Each copy or original of any agreement, contract or
other instrument which is identified in any exhibit delivered by Seller or
their counsel to Buyer (or its counsel or representatives), whether before
or after the execution hereof, is in fact what it is purported to be by the
Seller and has not been amended, canceled or otherwise modified.
6.21 Full Disclosure. None of the representations and warranties made by Seller
or made in any letter, certificate or memorandum furnished or to be
furnished by Seller, or on their behalf, contains or will contain any
untrue statement of a material fact, or omits any material fact the
omission of which would make the statements made misleading. There is no
fact known to Seller which materially adversely affects, or in the future
may (so far as Seller can now reasonably foresee) materially adversely
affect the condition, Assets, liabilities, business operations or prospects
of Seller that has not been set forth herein or heretofore communicated to
Buyer in writing pursuant hereto.
6.22 Bulk Sales Provisions. Seller, in compliance with the bulk sales provisions
of the California Uniform Commercial Code-Bulk Sales and the Arizona
Uniform Commercial Code Bulk Sales is selling less than one-half of the
Seller's inventory and equipment, as measured by value on the date this
Agreement is entered into by the Seller.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER.
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Buyer, represent and warrant to the Seller and the Shareholders as follows:
7.1 Organization and Qualification. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Utah.
All subsidiaries of Buyer are legal entities that are duly organized,
validly existing and in good standing under the laws of their respective
jurisdictions of incorporation. Buyer has all requisite power and authority
to own or operate its properties and conduct its business as it is now
being conducted. Buyer is duly qualified and in good standing as a foreign
corporation or entity authorized to do business in each of the
jurisdictions in which the character of the properties owned or held under
lease by it or the nature of the business transacted by it makes such
qualification necessary.
7.2 Capitalization; Subsidiaries. The authorized capital stock of Buyer
consists of 100,000,000 shares of Buyer's Common Stock. and 50,000,000
shares of preferred stock in classes to be designated by Telpro. As of the
Closing Date, no other shares of preferred stock shall be issued by Telpro
or shall be outstanding other than those 800,000 shares of Series A
Preferred Stock currently issued and the shares to be issued contemplated
by this Agreement. All issued and outstanding shares of capital stock of
Buyer are validly issued, fully paid, non-assessable and free of preemptive
rights.
7.3 Authority Relative to this Agreement. Buyer has all requisite corporate
power and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of Buyer, and no
other corporate proceedings on the part of Buyer are necessary to authorize
this Agreement or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Buyer and,
assuming this Agreement constitutes a valid and binding obligation of the
Seller, this Agreement constitutes a valid and binding agreement of Buyer,
enforceable against Buyer in accordance with its terms.
7.4 SEC Reports. Since September 1, 2002 to the best of its knowledge Buyer has
filed all required forms, reports and documents ("Buyer SEC Reports") with
the Securities and Exchange Commission (the "SEC") required to be filed by
it pursuant to the federal securities laws and the SEC rules and
regulations hereunder, all of which have complied in all material respects
with all applicable requirements of the Securities Act of 1933 (the
"Securities Act") and the Securities Exchange Act of 1934 (the "Exchange
Act"), and the rules and interpretive releases promulgated hereunder. None
of such Buyer SEC Reports, including without limitation any financial
statements, notes, or schedules included therein, at the time filed,
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 light of the circumstances under which they were
made, not misleading.
Each of the consolidated balance sheets in or incorporated by reference
into the Buyer SEC Reports fairly presents or will fairly present the
financial position of the entity or entities to which it relates as of its
date, and each of the related consolidated statements of operations and
retained earnings and cash flows or equivalent statements in the Buyer SEC
Reports (including any related notes and schedules) fairly presents or will
fairly present the results of operations, retained earnings and cash flows,
as the case may be, of the entity or entities to which it relates for the
period set forth therein (subject in the case of unaudited interim
statements, to normal yearend audit adjustments) in each case in accordance
with generally-accepted accounting principles applicable to the particular
entity consistently applied throughout the periods involved, except as may
be noted therein; and independent certified public accountants for Buyer
have rendered or will render an unqualified opinion with respect to each
audited financial statement included in the Buyer SEC Reports. The
consolidated financial statements included in the Buyer SEC Reports are
hereinafter sometimes collectively referred to as the "Buyer Financial
Statements."
7.5 Consents and Approvals: No Violation. Neither the execution and delivery of
this Agreement by Buyer nor the consummation of the transactions
contemplated hereby nor compliance by Buyer with any of the provisions
hereof will conflict with or result in any breach of any provision of the
Articles of Incorporation or by-laws of Buyer or any Subsidiary, require
any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, except pursuant to the
Securities Act and the Exchange Act, such filings and approvals as may be
required under the "blue sky", takeover or securities laws of various
states, or result in a default (with or without due notice or lapse of time
or both) (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, contract, license, agreement or other instrument
or obligation to which Buyer is a party or by which Buyer, any of its
Subsidiaries or any of their respective assets may be bound, result in the
creation or imposition of any lien, charge or other encumbrance on the
assets of Buyer or violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Buyer or any of its respective assets.
7.6 Litigation. etc. Except as disclosed in the Buyer SEC Reports, there is no
action, claim, or proceeding pending or, to the knowledge of Buyer,
threatened, to which Buyer is or would be a party before any court or
Governmental Authority acting in an adjudicative capacity or any arbitrator
or arbitration tribunal with respect to which there is a reasonable
likelihood of a determination having, or which, insofar as reasonably can
be foreseen in the future would have, a material adverse effect on Buyer
and since December 31, 1997, there have been no claims made or actions or
proceedings brought against any officer or director of Buyer arising out of
or pertaining to any action or omission within the scope of his employment
or position with Buyer, which claim, action or proceeding would involve a
material adverse effect on Buyer taken as a whole. All material litigation
and other material administrative, judicial or quasi-judicial proceedings
to which Buyer is a party or to which it has been threatened to be made a
party, are described in the Buyer SEC Reports.
7.7 Compliance with Law and Permits. Buyer has owned and operated its
properties and assets in substantial compliance with the provisions and
requirements of all laws, orders, regulations, rules and ordinances issued
or promulgated by all Governmental Authorities having jurisdiction with
respect thereto. All necessary governmental certificates, consents,
permits, licenses or other authorizations with regard to the ownership or
operation by Buyer of their respective properties and assets have been
obtained and no violation exists in respect of such licenses, permits or
authorizations. None of the documents and materials filed with or furnished
to any Governmental Authority with respect to the properties, assets or
businesses of Buyer contains any untrue statement of a material fact or
fails to state a material fact necessary to make the statements therein not
misleading.
7.8 Buyer Common Stock. The shares to be issued by Buyer pursuant to this
Agreement have been duly authorized and, when issued in accordance with the
terms of the this Agreement, will be validly authorized and issued and
fully paid and nonassessable, and no shareholder of Buyer will have any
preemptive rights or dissenter's right with respect thereto.
ARTICLE 8. SELLERS OBLIGATIONS BEFORE CLOSING.
----------------------------------
Seller covenant that, except as otherwise agreed in writing by Buyer, from the
date of this Agreement until the Closing:
8.1 Buyer's Access to Premises and Information. Buyer and its counsel,
accountants and other representatives shall be entitled to have full access
during normal business hours to all Seller's properties, books, accounts,
records, contracts and documents of or relating to the Assets. Seller shall
furnish or cause to be furnished to Buyer and its representatives all data
and information concerning the business, finances and properties of Seller
that may reasonably be requested.
8.2 Conduct of Business in Normal Course. Seller shall carry on its business
and activities diligently and in substantially the same manner as it
previously has been carried on, and shall not make or institute any unusual
or novel methods of purchase, sale, lease, management, accounting or
operation that will vary materially from the methods used by Seller as of
the date of this Agreement.
8.3 Preservation of Business Relationships. Seller shall use its best efforts,
without making any commitments on behalf of Buyer, to preserve its business
organization intact, to keep available to Seller its present employees, and
to preserve its present relationships with suppliers, customers and others
having business relationships with it.
8.4 Maintenance of Insurance. Seller shall continue to carry its existing
insurance, subject to variations in amounts required by the ordinary
operations of its business. At the request of Buyer and at Buyer's sole
expense, the amount of insurance against fire and other casualties which,
at the date of this Agreement, Seller carries on any of the Assets or in
respect of its operations shall be increased by such amount or amounts as
Buyer shall specify. Seller shall cause Buyer to be named as an additional
insured on each existing insurance policy carried by Seller.
8.5 New Transactions. Seller shall not do, or agree to do without the prior
written consent of the Buyer, any of the following acts:
(a) enter into any contract, commitment or transaction not in the usual and
ordinary course of its business; or
(b) enter into any contract, commitment or transaction in the usual and
ordinary course of business involving an amount exceeding $10,000.00,
individually, or $100,000.00 in the aggregate; or)
(c) make any capital expenditures in excess of $50,000.00 for any single item
or $100,000.00 in the aggregate, or enter into any leases of capital
equipment or property under which the annual lease charge is in excess of
$50,000.00; or
(d) sell or dispose of any capital assets with a net book value in excess of $
50,000.00 individually, or $100,000.00 in the aggregate.
8.7 Existing Agreements. Seller shall not modify, amend, cancel or terminate
any of its existing contracts or agreements, or agree to do any of those
acts.
8.8 Consent of Others. As soon as reasonably practical after the execution and
delivery of this Agreement, and in any event on or before the Closing Date,
Seller shall obtain the written consent of the persons described in
SCHEDULE 8.8 to this Agreement and will furnish to Buyer executed copies of
these consents to the assignment of the Contracts. Further, Seller agrees
to use its best efforts to obtain new contracts between the Buyer and the
customers described in SCHEDULE 1.1 to this Agreement.
8.9 Representations and Warranties True at Closing. Seller shall use their best
efforts to assure that all representations and warranties of Seller set
forth in this Agreement and in any written statements delivered to Buyer by
Seller under this Agreement will also be true and correct as of the Closing
Date as if made on that date and that all conditions precedent to Closing
shall have been met.
8.10 Sales and Use Tax on Prior Sales. Seller agrees to furnish to Buyer a
clearance certificate from the appropriate agencies and any related
certificates that Buyer may reasonably request as evidence that all sales
and use and other tax liabilities of Seller (other than income tax
liabilities) accruing before the Closing Date have been fully satisfied or
provided for.
8.11 Statutory Fillings. Seller shall cooperate fully with Buyer in preparing
and filing all information and documents deemed necessary or desirable by
Buyer under any statutes or governmental rules or regulations pertaining to
the transactions contemplated by this Agreement.
ARTICLE 9. CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
-------------------------------------------
The obligations of Buyer to purchase the Assets under this Agreement are subject
to the satisfaction, at or before the Closing, of all the conditions set out
below in this Article 9. Buyer may waive any or all of these conditions in
accordance with Section 14.2 hereof, provided however, that no such waiver of a
condition shall constitute a waiver by Buyer of any of its other rights or
remedies, at law or in equity, if Seller shall be in default of any of its
representations, warranties or covenants under this Agreement.
9.1 Accuracy of Sellers Representations and Warranties. All representations and
warranties by Seller in this Agreement or in any written statement that
shall be delivered to Buyer by Seller under this Agreement shall be true on
and as of the Closing Date as though made at that time.
9.2 Seller Performance. Seller shall have performed, satisfied, and complied
with all covenants, agreements, and conditions required by this Agreement
to be performed or complied with by Seller on or before the Closing Date.
9.3 Certification by Seller. Buyer shall have received a certificate, dated the
Closing Date, signed and verified by Seller's president or vice president
and its treasurer or assistant treasurer, certifying, in such detail as
Buyer and its counsel may reasonably request, that the conditions specified
in Sections 9.1 and 9.3 have been fulfilled.
9.4 Absence of Litigation. No action, suit or proceeding before any court or
any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened on or before the Closing Date.
9.5 Corporate Approval. The execution and delivery of this Agreement by Seller,
and the performance of its covenants and obligations under it, shall have
been duly authorized by all necessary corporate action, and Buyer shall
have received copies of all resolutions pertaining to that authorization,
certified by the secretary of Seller.
9.6 Consents. All necessary agreements and consents of any parties to the
consummation of the transaction contemplated by this Agreement, or
otherwise pertaining to the matters covered by it, shall have been obtained
by Seller and delivered to Buyer.
9.7 Approval of Documentation. The form and substance of all certificates,
instruments and other documents delivered to Buyer under this Agreement
shall be satisfactory in all reasonable respects to Buyer and its counsel.
9.8 Condition of Assets. The Assets shall not have been materially or adversely
affected in any way as a result of any fire, accident, storm, or other
casualty or labor or civil disturbance or act of God or the public enemy.
9.9 Resale Certificate. Buyer shall have received from Seller a sales tax
resale certificate or other comparable document, as appropriate, reasonably
satisfactory to Buyer, with respect to the Assets being purchased by Seller
for resale.
9.10 Valuation of Assets. Buyer shall have accepted the valuation of the Assets,
as set forth on the schedules attached hereto (as adjusted as of the
Closing Date) at the buyers option buyer may have an independently
certified inventory and valuation at the buyers cost.
9.11 Completion of Due Diligence. All due diligence reasonably required by the
Buyer has been completed, and the results of such due diligence are
satisfactory to the Buyer in its sole discretion and judgment with regard
to all aspects of the transaction, including by not limited to matters
relating to the Assets, or the intellectual property or financial prospects
of the business to be sold pursuant to this Agreement.
9.12 Compliance with Bulk Sales Laws. The parties have complied with all
applicable Bulk Sales Laws or similar provisions.
ARTICLE 10. CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
--------------------------------------------
The obligations of Seller to sell and transfer the Assets under this Agreement
are subject to the satisfaction, at or before the Closing, of all the following
conditions:
10.1 Accuracy of Buyer's Representations and Warranties. All representations and
warranties by Buyer contained in this Agreement or in any written statement
delivered by Buyer under this Agreement shall be true on and as of the
Closing as though such representations and warranties were made on and as
of that date.
10.2 Buyer's Performance. Buyer shall have performed and complied with all
covenants and agreements, and satisfied all conditions that it is required
by this Agreement to perform, comply with, or satisfy, before or at the
Closing.
10.3 Buyer's Corporate Approval. Buyer shall have received corporate
authorization and approval for the execution and delivery of this Agreement
and all corporate action necessary or proper to fulfill the obligations of
Buyer to be performed under this Agreement on or before the Closing Date.
ARTICLE 11. EMPLOYEE PLANS
--------------
Buyer is not assuming any obligations of Seller relating to any Employee Plan as
defined herein, and represent that the Seller has no Employee Plan in effect or
to which the Seller is subject. For purposes of this Agreement, the term
"Employee Plan" includes all pension, retirement, disability, medical, dental or
other health insurance plans, life insurance or other death benefit plans,
profit sharing, deferred compensation, stock option, bonus or other incentive
plans, vacation benefit plans, severance plans, or other employee benefit plans
or arrangements including, without limitation, any pension plan as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974 ("ERISA")
and any welfare plan as defined in Section 3(1) of ERISA, whether or not funded,
covering any employee or to which Seller is a party or bound or makes or has
made any contribution or by which Seller may have any liability to any employee
(including any such plan formerly maintained by or in connection with which
Seller may have any liability to any employee, and any such plan which is a
multi employer plan as defined in Section 3(37) (A) of ERISA.
ARTICLE 12. SELLERS OBLIGATIONS AFTER THE CLOSING
-------------------------------------
12.1 Preservation of Goodwill. Following the Closing, Seller will restrict their
activities so that Buyer's reasonable expectations with respect to the
goodwill, business reputation, employee relations and prospects connected
with the Assets will not be materially impaired. In furtherance, but not in
limitation of, this general obligation, Seller agree that, for a period of
the longer of (a) three (3) years following the Closing Date; (b) as long
as any of the Warrants referred to in paragraph 2.1 are outstanding; or (c)
as long as Buyer or its heirs, assigns or successors in interest carry on a
like business in the countries or areas specified:
(a) Seller will not compete with the Buyer or engage in any activity which
is substantially the same as, or represents an outgrowth of, any
business or activity presently conducted by Seller, in the field of
"pay per view" and "free to viewer" in room hotel services, if such
business or activity extends to the United States or of any counties of
such states and/or any other county in which Seller has heretofore
engaged in business or otherwise established its goodwill, business
reputation, or any customer relations. For the purposes of this
Agreement, the term "compete" shall mean (i) calling on, soliciting or
taking away, as a client or customer, or attempting to call on, solicit
or take away as a client or customer any individual, partnership,
corporation or association that was a client or customer of the Seller
pay-per-view and cable services to hotel/lodging rooms; or (ii)
entering into or attempting to enter into any business or substantially
similar business to or competing in any way with the business of the
Buyer in the pay-per-view and cable services to hotel/lodging rooms,
either alone or with any individual, partnership, corporation or
association; or (iii) acting as an agent, representative, consultant,
officer, director, independent contractor, or employee of an entity or
enterprise which is competing with the business of the Buyer; or (iv)
participating in any such competing entity or enterprise as an owner,
partner, limited partner, joint venture, creditor or stockholder.
The parties intend that the covenant contained in the preceding portion
of this Section shall be construed as a series of separate covenants,
one for each state county. Each separate covenant shall be deemed
identical in terms to the covenant contained in this Section. If, in
any judicial proceeding, a court shall refuse to enforce any of the
separate covenants deemed included in this Section, then such
unenforceable covenant shall be deemed eliminated from these provisions
for the purpose of those proceedings to the extent necessary to permit
the remaining separate covenants to be enforced.
(b) Seller will not disclose to any person or use for their own benefit any
price lists, pricing data, customer lists, or similar matters possessed
by them relating to the Assets or the business transferred to Buyer
unless they first clearly demonstrate to Buyer that such matters are
at, the time of the proposed disclosure or use, of common knowledge
within the trade.
12.3 Seller Indemnities. Seller shall indemnify, defend and hold harmless Buyer
and its officers, directors, and agents against and in respect of any and
all claims, demands, losses, costs, expenses, obligations, liabilities,
damages, recoveries and deficiencies, including interest, penalties and
reasonable attorneys fees, that Buyer or the Buyer, or their officers,
directors, or agents shall incur or suffer, which arise, result from or
relate to any breach of, or failure by Seller to perform, any of their
representations, warranties, covenants or agreements in this Agreement or
in any schedule, certificate, exhibit or other instrument furnished or to
be furnished by Seller under this Agreement. Notwithstanding any other
provision of this Agreement, Seller shall not be liable to Buyer, or the
Buyer, or their officers, directors, or agents on any warranty,
representation or covenant made by Selling
Parties in this Agreement, regarding any single claim, loss, expense,
obligation or other liability that does not exceed $10,000; provided,
however, that when the aggregate amount of all such claims, losses,
expenses, obligations and liabilities not exceeding $10,000 each reaches
$10,000, Seller shall thereafter be liable in full for all such breaches
and indemnities, and regarding all those claims, losses, expenses,
obligations, and liabilities.
12.4 Access to Records. From and after the Closing, Seller shall allow Buyer,
and its counsel, accountants and other representatives, such access to
records which after the Closing are in the custody or control of Seller as
Buyer reasonably requires in order to comply with its obligations under the
law or under contracts assumed by Buyer pursuant to this Agreement.
ARTICLE 13. COSTS
13.1 Finder's or Broker's Fees. Each of the parties represents and warrants that
it has dealt with no broker or finder in connection with any of the
transactions contemplated by this Agreement, and, insofar as it knows, no
broker or other person is entitled to any commission or finder's fee in
connection with any of these transactions.
13.2 Expenses. Buyer shall pay all costs and expenses incurred or to be incurred
by it in negotiating and preparing this Agreement and in closing and
carrying out the transactions contemplated by this Agreement.
ARTICLE 14. SECURITIES ASPECTS OF AGREEMENT
-------------------------------
14.1 All parties to this Agreement mutually understand, agree and covenant that
any referenced sale or other disposition of any security under this
Agreement shall be controlled and governed by this section. Specifically
should there arise any conflict of application or interpretation under this
section and any other provision or section of this Agreement; this section
shall be given primary definition and control. The term "securities" for
the purposes of this Agreement shall mean and include all shares of Buyer,
and any warrants to acquire those shares as well as any other instrument or
obligation customary or commonly described as a security. Each of the
following terms and conditions of the issuance and distribution of the
securities shall be fully applicable unless otherwise specifically waived
or treated in the following paragraphs.
14.2 Each security issued pursuant to the terms of this Agreement shall be a
"restricted" security unless otherwise specifically referenced as being
issued pursuant to a registration or offering.
14.3 Seller understands and agrees that a restricted security for the purposes
of this Agreement is one, which is issued without meeting registration
requirements under both federal and state law within the United States.
Each party to this Agreement further agrees and acknowledges that the
nature of restricted security is that it is not freely tradable. That is,
the holder of such security cannot immediately market or further distribute
such security in the open market, or through private transactions without
the express written consent of the issuer, primarily Buyer under the terms
of this Agreement.
14.4 Seller fully acknowledges and understands that the resale of a restricted
security will normally require substantial holding periods unless
subsequently subject to an intervening registration under applicable
federal and state securities laws. Seller acquiring restricted stock under
this Agreement further acknowledges and agrees that the principal, though
not exclusive, means by which restricted securities are resold under United
States law and conforming state laws and regulations is Securities and
Exchange Commission ("SEC") Rule 144, which essentially requires a holding
period of one year before the stock can be resold or any interest therein
further sold or assigned. In general terms, Rule 144 would require that
there be current public information about the Company before the provisions
of the Rule could be relied upon for subsequent resale, that the
aforementioned holding period had been met, that the sales occurred through
independent arms-length and unsolicited brokerage transactions, that
certain volume limitations on the number of shares sold in each three month
period be observed, and that a report of sales will be filed with the SEC.
Seller understands that the foregoing constitutes only a general
description of Rule 144 and that such person is or has the means to become
familiar with all of the specific provisions and terms of Rule 144 through
his independent legal advisors. Sellers further acknowledges and agrees
that while Rule 144 is not exclusive, that it is anticipated and intended
that it would be the primary means by which securities acquired under this
Agreement could be resold absent the specific registration provisions of
this Agreement.
14.5 Seller further acknowledges and agrees that, except as specifically
provided by the terms of this Agreement, none of the corporate parties will
have any obligation to register securities issued, and have no present
intention to register such securities other than is specifically provided
for by this Agreement. Each person under this Agreement acquiring
securities further understands and agrees that individual registration of
securities, absent registration by the issuer, is usually not practical and
should not be relied upon as a means for resale or other distributions of
securities acquired under this Agreement.
14.6 Any entity acquiring securities pursuant to this Agreement with the intent
to divide such securities among its principal shareholders as part of the
acquisition process, will be responsible for obtaining the knowledgeable
consent and agreement of such actual shareholder to the terms of this
Agreement, specifically referencing this paragraph.
14.7 Seller fully understands and agrees that should such person be deemed to be
in a "control" position as to Buyer incident to the completion of this
Agreement, that such person must comply with the volume limitations of Rule
144 to complete sales of his or her securities acquired, except for
securities which have been otherwise registered pursuant to this Agreement.
A control person has been defined by the SEC, and by most state securities
regulatory agencies, as a person who has the capacity to exercise control
over the issuing company. While no precise mathematical formulation of a
control person is applicable to all situations, the following are generally
presumed to be control people:
(i) a person holding 10% or more of the shares of the issuing company;
(ii)any principal officer or any director of the issuing company.
14.8 Seller represents that it is acquiring the Shares for its own account, for
investment and not with a view to the distribution or resale thereof. The
Seller further represent that their financial and other circumstances are
such that they have adequate means of providing for their current and
anticipated future needs without having to sell or otherwise dispose of the
Shares, and that the Seller are able to bear the economic risks of this
investment and consequently are able to hold the Shares for an indefinite
period of time and to sustain the loss of their entire investment in the
Shares, in the event such a loss should occur.
14.9 Seller acknowledges and represents that, due to its knowledge and
experience in financial and business matters, its investment experience
generally and its experience with investments similar to the Shares in
particular, Seller, either alone or together with its advisors, if any, is
able to understand and merits of, and the risks involved in, its proposed
investment in the Shares. Seller, either alone or together with its
advisors, if any, has the capacity to protect its own interests in
connection with this transaction.
14.10Seller acknowledges that the Buyer and Buyer have furnished or made
available to Seller all financial and other data relating to Buyer,
required by Seller to enable it to make an informed decision concerning its
approval of this transaction and its resulting acquisition of the Shares.
In particular, Seller acknowledges that it has received and reviewed the
financial statements of Buyer for the past two years and complete copies of
all of the Buyer SEC Reports for such period. Seller acknowledges that it
has been informed that Buyer has not previously conducted business except
as disclosed in the Buyer SEC Reports. Seller represents and acknowledges
that it and its principals have been engaged in the business of providing
pay-per-view and cable services in the hotel/lodging industry, which is
intended area of business for which the Assets are being acquired by the
Buyer. In this regard, Seller has been acquainted with the Chief Executive
Officer of Buyer. Seller further represents and acknowledges that it has
had full opportunity to obtain additional information from Buyer to verify
the accuracy of the information supplied by it and to evaluate the merits
of its investment decision, including, without limitation, full opportunity
to ask questions of and receive satisfactory answers and other information
from Buyer, its officers, directors and other persons acting on its behalf,
and all such questions have been answered, and such other information
supplied, to Seller's full satisfaction. Seller is aware of, and has
thoroughly evaluated, to its own satisfaction, the high degree of risk
associated with investing in Buyer, including but not limited to, the
specific risks associated with Buyer's business and the risks associated
with the ownership of common stock.
14.11Seller hereby represents and warrants to Buyer that Seller is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation
D. Seller further represents and warrants that it is a corporation, and
that each of the equity owners of Seller are "accredited investors" by
reason of the fact that each of the equity owners meets one or both of the
following criteria:
(i) The owner is a natural person whose individual net worth, or joint net
worth with owner's spouse, at the time of this agreement, exceeds
$1,000,000; or
(ii) The owner is a natural person who had an individual income in excess of
$200,000 in each of the two most recent years, or joint income with
owner's spouse in excess of $300,000 in each of those years, and has a
reasonable expectation of reaching the same income level in the current
year.
ARTICLE 15. FORM OF AGREEMENT
15.1 Headings. The subject headings of the Articles and Sections of this
Agreement are included for purposes of convenience only, and shall not
affect the construction or interpretation of any of its provisions.
15.2 Entire Agreement: Modification: Waiver. This Agreement constitutes the
entire agreement between the parties pertaining to the subject matter
contained in it and supersedes all prior and contemporaneous agreements,
representations, and understandings of the parties. No supplement,
modification or amendment of this Agreement shall be binding unless
executed in writing by all the parties. No waiver of any of the provisions
of this Agreement shall be deemed, or shall constitute, a waiver of any
other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by
the party making the waiver.
15.3 Counterparts. This Agreement may be executed simultaneously in one or more
counterparts, each of, which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
ARTICLE 16. PARTIES
16.1 Parties in Interest. Nothing in this Agreement, whether express or implied,
is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third persons to
any party to this Agreement, nor shall any provisions give any third
persons any right of subrogation or action over against any party to this
Agreement.
16.2 Assignment. This Agreement shall be binding on and shall inure to the
benefit of the parties to it and their respective heirs, legal
representatives, successors and assigns. Buyer agrees to obtain the written
consent of Seller if Buyer sells, assigns or otherwise transfers all or any
ownership interest in a material portion of the Assets prior to the time
that the Buyer has completed the terms of payment above in Article 2.
Seller agrees not to unduly withhold its consent to any sale, assignment or
transfer of the assets after written notice is served upon it according to
the terms of this Agreement. Seller shall give its written consent to the
Buyer within 15 days of receipt of the Buyer's request for Seller's
consent.
ARTICLE 17. REMEDIES
--------
17.1 Recovery of Litigation Costs. If any legal action or any arbitration or
other proceeding so brought for the enforcement of this Agreement, or
because of an alleged dispute, breach, default or misrepresentation in
connection with any of the provisions of this Agreement, the successful or
prevailing party or parties shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that action or proceeding, in
addition to any other relief to which it or they may be entitled.
17.2 Conditions Permitting Termination. Subject to the provisions of Article 3
relating to the postponement of the Closing Date, either party may on or
prior to the Closing Date terminate this Agreement by written notice to the
other, without liability to the other, if any bona fide action or
proceeding shall be pending against either party on the Closing Date that
could result in an unfavorable judgment, decree or order that would prevent
or make unlawful the carrying out of this Agreement.
17.3 Defaults Permitting Termination. If either Buyer or Seller materially
defaults in the due and timely performance of any of its warranties,
covenants, or agreements under this Agreement, the non-defaulting party or
parties may on the Closing Date give notice of termination of this
Agreement, in the manner provided in Article 17. The notice shall specify
with particularity the default or defaults on which the notice is based.
The termination shall be effective five days after the Closing Date, unless
the specified default or defaults have been cured on or before this
effective date for termination. Upon material default of the Buyer's
payment obligations under this Agreement, the Seller may foreclose its
security interest in the assets as referred to in paragraph 2(f) above.
ARTICLE 18. NATURE AND SURVIVAL OF REPRESENTIONS AND WARRANTIES
---------------------------------------------------
All representations, warranties, covenants and agreements of the parties
contained in this Agreement, or in any instrument, certificate, opinion or other
writing provided for in it, shall survive the Closing.
ARTICLE 19. NOTICES
All notices, requests, demands and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given on the date of
service if served personally on the party to whom notice is to be given, or on
the third day after mailing if mailed to the party to whom notice is to be
given, by first class mail, registered or certified, postage prepaid, and
properly addressed as follows:
Seller:
Coast Communications Inc.
0000 X. Xxxxx
Xxxx, XX 00000
Attention: Xxxxxx XxXxx
with copy to:
Johnson, Rasmussen, Xxxxxxxx & Xxxxx, P.L.C.
00 X. Xxxxxxxxx
Xxxx, XX 00000
Attention: Xxx Xxxxx
Shareholders: Xxxxxx XxXxx
0000 X. Xxxxx
Xxxx, XX 00000
Xxxx X.X. XxXxxxx
0000 X. Xxxxxxxx
Xxxx, XX 00000
Buyer:
Telecommunication Products, Inc.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx X
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with copy to:
========================
------------------------
Any party may change its address for purposes of this Article by giving the
other parties written notice of the new address in the manner set forth above.
ARTICLE 20. GOVERNING LAW
-------------
This Agreement shall be construed in accordance with, and governed by the laws
of the State of Arizona
ARTICLE 21. MISCELLANEOUS
-------------
21.1Announcements. None of Sellers will make any announcements to the
public or to employees of Seller concerning this Agreement or the
transactions contemplated hereby without the prior approval of Buyer,
which will not be unreasonably withheld. Notwithstanding any failure of
Buyer to approve it, Sellers may make an announcement of substantially
the same information as theretofore announced to the public by Buyer or
any announcement required by applicable law, but Seller shall in either
case notify Buyer of the contents thereof reasonably promptly in
advance of its issuance.
21.2 References. Unless otherwise specified, references to Sections or
Articles are to Sections or Articles in this Agreement.
21.3 BOARD OF DIRECTORS.
After the Closing Date, at the Annual General Share Holder Meeting, on
or about the 1st of July, the Buyer agrees to permit the seller to
nominate one (1) member of the Board of Directors at the next Annual
General Share Holder meeting, which will be scheduled upon completion
of Year End Audit, Year End is March 31, 2003.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it as of
the day and year first above written.
BUYER TELPRO, INC.,
a Colorado corporation
By_________________________________
Xxxxxx X. Xxxxxxx
Its: President
SELLER
Coast Communications Inc.
a Nevada corporation
By_________________________________
Xxxxxx X. XxXxx
Its: President
