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EXHIBIT 2.5
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (the "Agreement"), is made this
2nd day of July, 1998, by and between Protocol Acquisition Sub 1, Inc., a
Delaware corporation ("Buyer"), Protocol Holdings, Inc., a Delaware corporation
and ultimate parent of Buyer ("Parent"), Answerphone of Florida, Inc. d/b/a/
IOCOM, a Florida corporation (the "Seller") and Xxxxxx X. Xxxxxxx, as trustee of
the Amended and Restated Xxxxxx X. Xxxxxxx Family Trust u/a/d 10/15/87, Xxxxxx
X. Xxxxxxx, as trustee of the Amended and Restated Xxxxxx X. Xxxxxxx Family
Trust u/a/d 10/15/87, and D. Xxxxx Xxxxxxx (the "Stockholders", and each
individually, a "Stockholder").
W I T N E S S E T H :
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WHEREAS, the Seller is principally engaged in the business of
supplying telemarketing services (the "Business") and is the end user subscriber
for certain toll free telephone numbers listed on Schedule 2.1(q) hereto (the
"Toll Free Telephone Numbers");
WHEREAS, the Stockholders are presently the owners of all of
the issued and outstanding capital stock of the Seller; and
WHEREAS, the Seller desires to sell to Buyer, and Buyer
desires to purchase from the Seller substantially all of its assets and
operations subject to certain liabilities, all in the manner and subject to the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, the
parties hereby agree as follows:
1. TERMS OF ACQUISITION.
1.1 PURCHASE AND SALE OF ASSETS. Subject to the terms and
conditions of this Agreement, on the Closing Date (as defined in Section 1.6
below), the Seller shall, and the Stockholders shall cause the Seller to, sell,
transfer, convey, assign and deliver ("Transfer") to Buyer, and Buyer shall
purchase, acquire and accept from the Seller, all of the Seller's rights,
properties, assets, contracts, leases and businesses of every kind, character
and description, whether tangible or intangible, real, personal or mixed,
accrued, contingent or otherwise, and wherever located, less and except the
Excluded Assets (as defined in Section 1.2 below) (after giving effect to the
exclusion of the Excluded Assets, such assets are hereinafter collectively
referred to as the "Transferred Assets"), free and clear of all liens, claims
and encumbrances, including, without limitation:
(a) all cash and cash equivalents;
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In this Exhibit, "[***]" represents material omitted from this Exhibit and filed
separately with the Securities and Exchange Commission and for which
Confidential Treatment has been requested.
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(b) all machinery, equipment, furniture, office equipment, telephone
equipment, computers and computer equipment, spare parts, supplies, tools and
vehicles;
(c) all of the Seller's right, title and interest in and to any income
and payments due the Seller, including, without limitation, all accounts and
accounts receivable whether or not reflected on the Seller's books and records;
(d) all letters of credit, leases of real and personal property,
rental agreements, commitments, insurance policies, purchase orders, sales
orders, service agreements, maintenance agreements, distribution agreements,
supply agreements and all other contracts, agreements and understandings,
whether written or oral, and all rights, claims and causes of action thereunder,
whether pending or inchoate;
(e) all prepaid assets and all deposits, refunds, rebates and other
rights to payment relating to the Transferred Assets or Assumed Liabilities, (as
defined in Section 1.3 below);
(f) all intangible assets (including, without limitation, all issued
and applied for patents, trademarks, copyrights, trade names, trade secrets,
service marks, customer lists, relationships and arrangements with customers,
covenants not to compete, authors, designers and suppliers, inventions,
formulae, processes and permits, computer software and source code, and all
licenses, agreements and applications with respect to any of the foregoing, any
goodwill associated with any of the foregoing, and all claims and causes of
action relating to any of the foregoing, including claims and causes of action
for past infringement) arising from or utilized in the operations of the
Business, including the name "IOCOM";
(g) to the extent transferable, all licenses, authorizations and
permits issued by any governmental agency relating to the Business or the
Transferred Assets, and all applications therefor pending; and
(h) all books, records and files relating to the Business and the
Transferred Assets and the operations thereof for all periods ending on or
before the Closing Date, but excluding such items which relate to the Excluded
Assets or the liabilities of the Seller not assumed by Buyer.
1.2 EXCLUDED ASSETS. Notwithstanding anything in Section 1.1 to the
contrary, the Seller shall retain all of its right, title and interest in and to
all of, and shall not Transfer to Buyer any of, the following assets, rights and
properties (the "Excluded Assets"):
(a) any proceeds and any other consideration paid or payable in
accordance with this Agreement and all rights of the Seller under this Agreement
or any agreement or instrument executed pursuant hereto or thereto, including,
without limitation, the Seller's right to enforce Buyer's representations,
warranties and covenants hereunder and the obligations of Buyer to pay, perform
or discharge the Assumed Liabilities;
(b) all minute books, stock books and similar corporate records of the
Seller; and
(c) the items set forth on Schedule 1.2(c).
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1.3 ASSUMPTION OF LIABILITIES. Subject to the terms and conditions of this
Agreement, on the Closing Date, Buyer shall assume and agree to pay, perform and
discharge when due only the following liabilities and obligations of the Seller
and no others:
(a) liabilities and obligations of the Seller in respect of the
accounts payable of the Seller set forth in the 12-Month Financial Statements
(as defined in Section 1.7(a) hereof) and accounts payable of the Seller
incurred by the Seller in the ordinary course of business, including obligations
to employees in respect of vacation and sick-leave, since the date thereof to
the extent reflected on the 12-Month Financial Statements or incurred since the
date thereof, in each case exclusive of any such accounts payable in respect of
personal expenses of the Stockholders;
(b) liabilities and obligations of the Seller in respect of Funded
Debt (as defined in Section 1.7(d) hereof) outstanding on the Closing Date but
in no event in excess of $20,000;
(c) liabilities and obligations of the Seller in respect of up to
$15,000 in fees and expenses, payable or incurred by the Seller in connection
with this Agreement and the transactions contemplated hereby (the "Assumed
Expenses"); and
(d) obligations of the Seller for performance after the Closing under
the agreements set forth on Schedule 2.1(v) hereto.
1.4 EXCLUDED LIABILITIES. "Excluded Liabilities" shall mean, and Buyer
shall not assume and shall have no liability for, any liabilities or obligations
of the Seller not specifically set forth in Section 1.3 above, including,
without limitation, the following:
(a) any liability of the Seller for any Federal, state, local or
foreign income, capital gains or franchise taxes or taxes on capital (including,
without limitation, any deferred income tax liability and any penalties and
interest thereon);
(b) any liability for expenses incurred by, or for claims made
against, the Seller in connection with or resulting from or attributable to this
Agreement or the transactions contemplated hereby, if any;
(c) any liability for any investment banking, brokerage or similar
charge or commission, or any attorneys' or accountants' fees and expenses,
payable or incurred by the Seller in connection with the preparation,
negotiation, execution or delivery of this Agreement or the transactions
contemplated hereby; other than the Assumed Expenses;
(d) any liability of the Seller to Buyer arising out of any
misrepresentation or breach of any warranty of the Seller contained in this
Agreement or any of the schedules or exhibits hereto or in any certificate,
agreement, instrument or other document delivered pursuant hereto or out of the
failure of the Seller to perform any of its agreements or covenants contained
herein or therein or to perform or satisfy any of the Excluded Liabilities;
(e) any liability or obligation to employees including, without
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limitation, liabilities and obligations in respect of compensation and severance
(including, without limitation, severance obligations arising as a result of the
transactions contemplated hereby) and any liability or obligation under any
employee pension, benefit or other plan other than accrued payroll for the
normal payroll period in which the Closing occurs;
(f) any liability for Funded Debt in excess of $20,000;
(g) any liability set forth on Schedule 1.4(g); and
(h) any other liability arising from or relating to the operation of
the Business on or prior to the Closing Date to the extent not specifically set
forth in Section 1.3(a), (b), (c) or (d) above.
The Seller shall remain fully liable for, and shall promptly pay when due, the
Excluded Liabilities.
1.5 PURCHASE PRICE.
(a) As the purchase price for all of the Transferred Assets (the
"Purchase Price"), (i) Buyer shall pay to the Seller an aggregate sum, subject
to adjustment as provided in Section 1.7 below, of [******] in cash (the "Cash
Purchase Price"), and (ii) Buyer shall cause Parent to issue [******] shares of
Common Stock of Parent (the "Parent Common Stock"), the further transfer of
which shall be restricted under the Securities Act of 1933 and as provided under
Section 2.2(e) hereof.
(b) The Cash Purchase Price shall be payable in cash at Closing by
wire transfer of immediately available funds (i) [******] to an account of the
Seller designated in writing by the Seller and (ii) [******] to the account of
Xxxxxx X. Xxxxx, P.A. Trust Account, as escrow agent ("Escrow Agent") designated
in the escrow agreement annexed hereto as Exhibit A (as the same may be amended
from time to time, the "Escrow Agreement"), to be held and disbursed by the
Escrow Agent pursuant to the terms thereof.
1.6 CLOSING DATE. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxx X. Xxxxx,
P.A. 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx 00000, at 10:00 A.M., July 15, 1998,
or at such other place and/or on such other date and time as shall be agreed
upon by Buyer and the Seller (the "Closing Date").
1.7 PURCHASE PRICE ADJUSTMENT.
(a) Within one hundred twenty (120) days after Closing, Buyer shall
cause KPMG Peat Marwick LLP to deliver to the Seller an audited balance sheet
and related statements of income, retained earnings and cash flows for the
Seller's fiscal year ended December 31, 1997 (the "1997 Financial Statements"),
and for the 12-month period ended June 30, 1998 (the "12-Month Financial
Statements"), all of which financial statements shall be prepared in accordance
with generally accepted accounting principles ("GAAP") and the rules and
regulations of the Securities Exchange Commission applicable to financial
reporting of public companies.
(b) The Seller shall have forty-five (45) days from delivery of the
1997 Financial Statements and the 12-Month Financial Statements (collectively,
the "Financial
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Statements") to raise any objection thereto by delivery of written notice to
Buyer setting forth such objections in reasonable detail. In the event that the
Seller shall fail to so deliver such written objections with respect to any of
the Financial Statements within such 45-day period, then any such Financial
Statements in respect of which no such objection is so delivered shall be deemed
final and binding on the parties. In the event that any such objections are so
delivered, Buyer and the Seller shall attempt, in good faith, to resolve such
objections and, if unable to do so within fifteen (15) days of delivery of such
objections, shall, within five (5) business days thereafter designate a
nationally recognized firm of independent public accountants, mutually
satisfactory to Buyer and the Seller (the "Independent Accountants"). In the
event that Buyer and the Seller are unable to agree on the Independent
Accountants within such 5-business day period, the Independent Accountants shall
be designated jointly by the independent accountants of Buyer and the Seller
within three (3) business days thereafter. The Independent Accountants shall
resolve all remaining objections to the Financial Statements made by the Seller
in accordance herewith within thirty (30) days from their date of designation.
The determination of the Independent Accountants shall be final and binding on
the parties. The fees and expenses of the Independent Accountant shall be borne
by the Stockholders, jointly and severally, unless the determination of the
Independent Accountants shall result in an increase in the amount of the
Purchase Price of more than ten (10%) percent over the amount of the Purchase
Price as determined from the Financial Statements originally delivered to
Seller.
(c) The Cash Purchase Price shall be adjusted in each of the following
instances, based on the Financial Statements, as finally determined in
accordance herewith, by the amount (the "Adjustment Amount") determined as
follows:
(i) in the event that the sum of [******] shall exceed 12-Month
EBITDA (as defined below) by more than [******], the Cash Purchase Price shall
be reduced by an amount equal to [****] for each $1.00 of such excess (rounded
down to the nearest whole dollar);
(ii) in the event that 12-Month EBITDA shall exceed the sum of
[*******] by more than [*****], the Cash Purchase Price shall be increased by an
amount equal to [*****] for each $1.00 of such excess (rounded down to the
nearest whole dollar); and
(iii) in the event that the sum of [*******] shall exceed Net
Current Accounts Receivable (as defined below), the Cash Purchase Price shall be
reduced by an amount equal to [****] for each $1.00 of such excess (rounded down
to the nearest whole dollar).
Within three (3) business days of the final determinations of the Financial
Statements, the Seller shall pay to Buyer (whether or not the sum of such
Adjustment Amounts shall exceed the Cash Purchase Price) each Adjustment Amount
calculated pursuant to Sections 1.7(c)(i) and 1.7(c)(iii) above, in the
aggregate, by wire transfer of immediately available funds to an account
designated in writing by Buyer. Buyer shall pay to the Seller the Adjustment
Amount calculated pursuant to 1.7(c)(ii) above, net of any unpaid Adjustment
Amounts due to Buyer pursuant to Sections 1.7(c)(i) and 1.7(c)(iii) above, on
terms to be agreed upon by Buyer and the Seller. Buyer shall endeavor in good
faith to pay such amount to the Seller as soon as is practicable.
(d) For purposes hereof, (i) "Funded Debt" shall mean the excess of
the remainder of all indebtedness of the Seller for borrowed money outstanding
as of the Closing
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Date (including, without limitation, capitalized lease obligations) over the
aggregate cash balances as of the Closing Date; (ii) "12-Month EBITDA" shall
mean the earnings of the Seller for the 12-month period ended June 30, 1998, as
set forth in the 12-Month Financial Statements before deduction for interest,
taxes, depreciation and amortization, in each case determined in accordance with
GAAP, as adjusted for non-recurring revenue, charges and adjustments set forth
on Schedule 1.7(d) with respect to non-recurring and deferred revenue, to the
extent actually received, and with respect to non-recurring charges and
adjustments, to the extent actually earned or incurred and to the extent of the
amounts thereof which Buyer determines will not be incurred by it in the
operation of the Business in the ordinary course from and after June 30, 1998,
and (iii) "Net Current Accounts Receivable" shall mean the excess of accounts
receivable of the Seller as of July 31, 1998, which are good and collectible and
have been incurred in the ordinary course of business for services performed or
products delivered and which are due and payable within 60 days from the date of
invoice over the accounts payable of the Seller as of July 31, 1998.
(e) The parties acknowledge and agree that the Purchase Price shall be
allocated among the Transferred Assets in accordance with Schedule 1.7(e)
hereto. The parties shall not take any position for purposes of Federal, state
or local income taxes respecting the allocation of the Purchase Price which is
inconsistent with the allocation set forth on such Schedule.
2. REPRESENTATIONS AND WARRANTIES.
2.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE STOCKHOLDERS. The
Seller and the Stockholders hereby, jointly and severally, represent and warrant
to, and covenant and agree with, Buyer as follows:
(a) ORGANIZATION, GOOD STANDING AND POWER. The Seller is a corporation
duly organized, validly existing and in good standing and authorized to exercise
its corporate powers, rights and privileges under the laws of the State of
Florida with full corporate power and authority to own, lease and operate its
properties and to carry on its business as presently conducted by it. Schedule
2.1(a) hereto sets forth all states and other jurisdictions in which the Seller
is duly qualified and in good standing to do business as a foreign corporation.
There are no other states or jurisdictions in which the character and location
of the properties owned or leased by it, or the conduct of its business makes
such qualification necessary. Copies of the Seller's Articles of Incorporation
and all amendments thereto, and of the Seller's By-Laws, as amended to date, are
attached to Schedule 2.1(a) and are complete and correct. The Seller's minute
books contain complete and accurate records of all meetings and other corporate
actions, including, without limitation, actions by unanimous written consent of
the Stockholders and board of directors of the Seller (including all committees
of its board of directors).
(b) AUTHORITY. The execution and delivery by the Seller and the
Stockholders of this Agreement and all of the agreements, schedules,
exhibits, documents and instruments specifically provided for hereunder to be
executed and/or delivered by any or all of them (all of the foregoing, including
this Agreement, being hereinafter sometimes collectively referred to as the
"Executed Agreements"), the performance by the Seller and any or all of the
Stockholders (to the extent that they are parties thereto) of their respective
obligations under the Executed Agreements, and the consummation of the
transactions contemplated by the Executed
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Agreements, have been duly and validly authorized by all necessary corporate
action on the part of the Seller and by the Stockholders, and the Seller has all
necessary corporate power with respect thereto. The Executed Agreements are, or
when executed and delivered by the delivering parties shall be, the valid and
binding obligations of the delivering parties, enforceable in accordance with
their respective terms, except to the extent that enforceability may be limited
by the operation of bankruptcy, insolvency or similar laws. Neither the
execution and delivery by the Seller and any or all of the Stockholders (to the
extent that they are parties thereto) of the Executed Agreements, nor the
consummation of the transactions contemplated thereby, nor the performance by
the Seller and any or all of the Stockholders (to the extent that they are
parties thereto) of their respective obligations under the Executed Agreements,
shall (nor with the giving of notice or the lapse of time or both would) (i)
conflict with or result in a breach of any provision of the Articles of
Incorporation or By-Laws of the Seller, (ii) give rise to a default, or any
right of termination, cancellation or acceleration, or otherwise result in a
loss of contractual benefits to the Seller, under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation to which the Seller or any Stockholder is a party
or by which it or any of its properties or assets may be bound, (iii) violate
any order, writ, injunction, decree, law, statute, rule or regulation applicable
to the Seller or any of the Stockholders or any of their respective properties
or assets, (iv) result in the creation or imposition of any lien, claim,
restriction, charge or encumbrance upon any of the properties or assets of the
Seller, or (v) interfere with or otherwise materially and adversely affect the
ability of the Seller to carry on its business as now conducted.
(c) INTERESTS IN OTHER ENTITIES. Except as set forth in Schedule
2.1(c) hereto, the Seller does not (i) own, directly or indirectly, of record or
beneficially, any shares of voting stock or other equity securities of any other
corporation or entity, (ii) have any ownership interest, direct or indirect, of
record or beneficially, in any entity, or (iii) have any obligation, direct or
indirect, present or contingent, to purchase or subscribe for any interest in,
advance or loan monies to, or in any way make investments in, any person or
entity, or to share any profits or capital investments in other persons or
entities, or both.
(d) GOVERNMENTAL AUTHORIZATIONS; THIRD PARTY CONSENTS. Except as set
forth in Schedule 2.1(d) hereto, no approval, consent, compliance, exemption,
authorization or other action by, or notice to or filing with, any governmental
authority or any other entity, and no lapse of a waiting period, is necessary or
required to be obtained by the Seller or any Stockholder in connection with the
execution, delivery or performance by any of them, of this Agreement, any of the
Executed Agreements or the transactions contemplated hereby.
(e) PROJECTIONS. The Seller has delivered to Buyer a set of
projections (the "Projections"), a copy of which is attached hereto as Schedule
2.1(e), which the Seller and the Stockholders have been advised are material to
Buyer in its decision to enter into this Agreement. The Projections are based on
the best estimates of the Seller and the Stockholders derived from reasonable
expectations at the time the Projections were made, and the Seller and the
Stockholders believe that Buyer is justified in relying thereon, there being,
however, no guarantee of the achievement of the Projections.
(f) FINANCIAL STATEMENTS. The Seller has delivered to Buyer true and
complete copies of its unaudited balance sheet as of December 31, 1996, and the
related statement of cash receipts and disbursements for the year ended December
31, 1996 (the "1996 Financial
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Statements"), true and complete copies of its unaudited balance sheet as of
December 31, 1997, and the related income statements of income for the year
ended December 31, 1997 (the "1997 Financial Statements") and true and complete
copies of its unaudited balance sheet as of March 31, 1998 (the "Interim Balance
Sheet"), and the related income statement for the three months ending March 31,
1998 (collectively, with the Interim Balance Sheet, the "Interim Financial
Statements"). Except as set forth on Schedule 2.1(f), all of such financial
statements, including any notes thereto, were prepared in accordance with GAAP
applied on a consistent basis throughout the periods involved subject, in
respect of the Interim Financial Statements, to normal year-end audit
adjustments, none of which are material (except as may be otherwise expressly
stated in said financial statements and notes thereto or in Schedule 2.1(f)
hereto). The financial statements fairly present the financial position of the
Seller at the dates thereof and the results of its operations for the periods as
indicated. The books and records of the Seller are in all material respects
complete and correct, have been maintained in accordance with good business
practices, and accurately reflect the basis for the financial condition and
results of operations of the Seller as set forth in the financial statements
referred to herein.
(g) ABSENCE OF UNDISCLOSED LIABILITIES. The Seller does not have any
liabilities, commitments or obligations, whether accrued, absolute, contingent
or otherwise which have not been (i) in the case of liabilities, commitments and
obligations of a type customarily reflected on the corporate balance sheet of
the Seller, reflected on the Interim Balance Sheet in accordance with GAAP,
incurred, consistent with past practice, in the ordinary course of business
since the date of the Interim Balance Sheet and which are not material either
individually or in the aggregate or (ii) in the case of all other types of
liabilities and obligations, described in Schedule 2.1(g) hereto.
(h) ABSENCE OF CERTAIN CHANGES. Except as and to the extent set forth
in Schedule 2.1(h) hereto, since December 31, 1997, the Seller has not:
(i) suffered any material adverse change in its working capital,
condition (financial or otherwise), assets, liabilities, business, operations or
prospects;
(ii) incurred any material liabilities or obligations except
items incurred in the ordinary course of business and consistent with past
practice, none of which exceeds $15,000 (counting obligations or liabilities
arising from one transaction or a series or similar transactions, and all
periodic installments or payments under any lease or other agreement providing
for periodic installments or payments, as a single obligation or liability), or
experienced any increase in, or change in any assumption underlying or methods
of calculating, any bad debt, contingency or other reserves;
(iii) paid, discharged or satisfied any claim, liabilities or
obligations (absolute, accrued, contingent or otherwise) other than the payment,
discharge or satisfaction in the ordinary course of business and consistent with
past practice of liabilities and obligations reflected or reserved against in
the Interim Balance Sheet or incurred in the ordinary course of business and
consistent with past practice since the date of the Interim Balance Sheet;
(iv) permitted or allowed any of its property or assets (real,
personal or mixed, tangible or intangible) to be subjected to any mortgage,
pledge, lien, security interest, encumbrance, restriction or charge of any kind;
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(v) written off as uncollectible any notes or accounts
receivable, except for write-offs in the ordinary course of business and
consistent with past practice, none of which are material;
(vi) canceled any debts or waived any claims or rights of
substantial value, or sold, transferred, or otherwise disposed of any of its
properties or assets (real, personal or mixed, tangible or intangible), except
in the ordinary course of business and consistent with past practice;
(vii) disposed of or permitted to lapse any rights to use any
Toll Free Telephone Number listed on Schedule 2.1(q) hereof, patent, trademark,
trade name or copyright, or disposed of or disclosed (except as necessary in the
conduct of its business) to any person any trade secret, formula, process or
know-how;
(viii) granted any general increase in the compensation of
officers or employees (including any such increase pursuant to any bonus,
pension, profit-sharing or other plan or commitment) or any increase in the
compensation payable or to become payable to any officer or employee, and,
unless otherwise set forth in Schedule 2.1(h), no such increase is customary on
a periodic basis or is required by agreement or understanding;
(ix) made any single capital expenditure or commitment in excess
of $10,000 for additions to property, plant, equipment or intangible assets or
made aggregate capital expenditures and commitments in excess of $50,000 (on a
consolidated basis), for additions to property, plant, equipment or intangible
assets;
(x) redeemed any shares of its capital stock or declared, paid or
set aside for payment any dividend or other distribution in respect of its
capital stock;
(xi) made any change in any method of accounting or accounting
practice;
(xii) paid, loaned or advanced any amount to, or sold,
transferred or leased any properties or assets (real, personal or mixed,
tangible or intangible) to, or entered into any agreement or arrangement with,
any of its officers, directors, debtholders, stockholders or employees or any
"affiliate" or "associate" of any of its officers, directors, noteholders,
stockholders or employees (as such terms are defined in Rule 405 promulgated
under the Securities Act and as used herein "Associate" and "Affiliate"), except
for compensation to officers and employees at rates not materially exceeding the
rates of compensation paid during the year ended December 31, 1997;
(xiii) paid any amount in respect of Funded Debt except for
regularly scheduled payments of principal and interest in accordance with the
terms thereof; or
(xiv) agreed, whether in writing or otherwise, to take any action
described in this Section unless such action is specifically excepted from this
Section or described in Schedule 2.1(h).
(i) TAX MATTERS. Except as set forth in Schedule 2.1(i) hereto, the
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Seller has filed with the appropriate governmental agencies all Federal, state,
local or foreign tax returns and reports required to be filed by it ("Returns"),
has paid in full or made adequate provision for the payment of, all taxes of
every nature, including, but not limited to, income, sales, franchise and
withholding taxes ("Taxes"), together with interest, penalties, assessments and
deficiencies owed by it (whether or not shown on any Returns), and all such
Returns were correct and complete in all respects. The Seller is not currently
the beneficiary of any extension of time within which to file any Returns. The
Seller has previously provided Buyer with true and complete copies of all such
Returns filed within the past 5 years. The provisions for income and other Taxes
reflected on the Interim Balance Sheet are adequate for all accrued and unpaid
taxes of the Seller as of the date of the Interim Balance Sheet, whether (i)
incurred in respect of or measured by income of the Seller for any periods prior
to the close of business on that date, or (ii) arising out of transactions
entered into, or any state of facts existing, on or prior to that date. The
provision for Taxes reflected on the books of account of the Seller is adequate
for all Taxes of said entity which accrued since the date of the Interim Balance
Sheet. There are no filed or other known tax liens upon any property or assets
of the Seller. The Seller has not waived any statute of limitations in respect
of Taxes or executed or filed with any governmental authority any agreement
extending the period for the assessment or collection of any Taxes, and it is
not a party to any pending or, to the Seller's or any Stockholder's best
knowledge, threatened action or proceeding by any governmental authority for the
assessment or collection of Taxes. To the best knowledge of the Seller and the
Stockholders, no issue has arisen in any examination of the Seller by any
governmental authority that if raised with respect to any other period not so
examined would, if upheld, result in a material deficiency for any other period
not so examined. There is no unresolved written claim by a governmental
authority in any jurisdiction where the Seller does not file Returns that the
Seller is or may be subject to taxation by such jurisdiction. There has been no
examination or audit with respect to Taxes with respect to any year. The Seller
has withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party.
(j) LITIGATION. Except as set forth in Schedule 2.1(j) hereto, there
are no suits or actions, or administrative, arbitration or other proceedings or
governmental investigations, pending, or to the best knowledge of the Seller and
the Stockholders, threatened against or affecting, or which may affect, the
Seller or any of its properties, assets or businesses or the transactions
contemplated hereby. To the best knowledge of the Seller and the Stockholders,
there are no outstanding judgments, orders, stipulations, injunctions, decrees
or awards against the Seller which are not satisfied.
(k) COMPLIANCE WITH APPLICABLE LAW. The Seller is, and at all times
since its formation has been in compliance with all Federal, state, local and
foreign laws, statutes, ordinances, regulations, and administrative rulings
(collectively "Laws"), promulgated by any governmental or regulatory authority
applicable to the Seller or to the conduct of the business or operations of the
Seller or to the use of its properties and assets, including, without
limitation, all environmental Laws and all Laws relating to the Toll Free
Telephone Numbers. The Seller has not received, and the Seller and the
Stockholders do not know of the issuance or threatened issuance of, any notices
of violation or alleged violation of any laws by the Seller. Neither the Seller
nor the Stockholders know of any pending or proposed legislation applicable to
the Seller or to the conduct of business or operations of the Seller which, if
enacted, could have a material adverse effect on the business, results of
operations, financial position or prospects of the Seller or the value of its
properties or assets
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(l) ENVIRONMENTAL MATTERS. Except as set forth on Schedule 2.1(l)
hereto:
(i) neither the Seller nor its operations or the real property
leased by the Seller as set forth in Schedule 2.1(n) hereto (the "Facility") are
subject to any outstanding written order, consent decree or settlement agreement
with any person relating to (A) any Environmental Laws (as defined in below),
(B) any Environmental Claim (as defined below), or (C) any Hazardous Materials
Activity (as defined below) that, individually or in the aggregate, could
reasonably be expected to have a material adverse effect on the business,
results of operations, financial position or prospects of the Seller or the
value of its properties or assets;
(ii) the Seller has not received any letter or request for
information under Section 104 of the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 9604) or any comparable state
law;
(iii) there are, and to the Seller's and the Stockholders'
knowledge, have been no conditions, occurrences, or Hazardous Materials
Activities which could reasonably be expected to form the basis of an
Environmental Claim against the Seller or that, individually or in the
aggregate, could reasonably be expected to have a material adverse effect on the
business, results of operations, financial position or prospects of the Seller
or the value of its properties or assets;
(iv) neither the Seller nor, to the Seller's and the
Stockholders' knowledge, any predecessor of the Seller, has filed at any time
any notice under any Environmental Law indicating past or present treatment of
Hazardous Materials at the Facility, and none of the Seller's operations
involves the generation, transportation, storage, or disposal of hazardous
waste, as defined under 40 C.F.R. Parts 260-270 or any state equivalent; and
(v) compliance with all current or reasonably foreseeable future
requirements pursuant to or under Environmental Laws will not, individual or in
the aggregate, have a reasonable possibility of giving rise to a material
adverse effect on the business, results of operations, financial position or
prospects of the Seller or the value of its properties or assets.
(vi) Notwithstanding anything in this Section 2.1(l) to the
contrary, no event or condition has occurred or is occurring with respect to the
Seller relating to any Environmental Law, any Release (as defined in subsection
(vii) below) of Hazardous Materials, or any Hazardous Material Activity,
including any matter disclosed on Schedule 2.1(l), which individually or in the
aggregate has had or could reasonably be expected to have a material adverse
effect on the business, results of operations, financial position or prospects
of the Seller or the value of its properties or assets.
(vii) The following terms used in this Section 2.1(l) shall have
the following meanings:
(A) "Environmental Laws" shall mean any and all current or
future statutes, ordinances, orders, rules regulations, guidance documents,
judgments, governmental authorizations, or any other requirements of
governmental authorities relating to (1)
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environmental matters, including those relating to any Hazardous Materials
Activity (as defined below), (2) the generation, use, storage, transportation or
disposal of Hazardous Materials (as defined below), or (3) occupational safety
and health, industrial hygiene, land use or the protection of human, plant, or
animal health or welfare, in any manner applicable to the Seller or the
Facility, including the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9601 ET SEQ.), - the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 ET SEQ.), the Resource Conservation -
and Recovery Act (42 U.S.C. Section 6901 ET SEQ.), the Federal Water Pollution
Control Act (33 U.S.C. - Section 1251 ET SEQ.), the Clean Air Act (42 U.S.C.
Section 7401 ET SEQ.), the Toxic Substances Control - - Act (15 U.S.C. Section
2601 ET SEQ.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
- Section 136 ET SEQ.), the Occupational Safety and Health Act (29 U.S.C.
Section 651 ET SEQ.), the Oil - - Pollution Act (33 U.S.C. Section 2701 ET SEQ.)
and the Emergency Planning and Community Right-to-Know - Act (42 U.S.C. Section
11001 ET SEQ.), each as amended or supplemented, any analogous present or future
- state or local statutes or laws, and any regulations promulgated pursuant to
the foregoing.
(B) "Environmental Claim" shall mean any investigation,
notice, notice of violation, claim, action, suit, proceeding, demand, abatement
order or other order or directive (conditional or otherwise), by any
governmental authority or any other person, arising (1) pursuant to or in
connection with any actual or alleged violation of any Environmental Laws, (2)
in connection with any Hazardous Materials or any actual or alleged Hazardous
Materials Activity, or (3) in connection with any actual or alleged damage,
injury, threat or harm to heath, safety, natural resources or the environment.
(C) "Hazardous Materials" shall mean (1) any chemical,
material or substance at any time defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials", "extremely
hazardous waste", "acutely hazardous waste", "radioactive waste", "biohazardous
waste", "pollutant", "toxic pollutant", "contaminant", "restricted hazardous
waste", "infectious waste", "toxic substances", or any other term or expression
intended to define, list or classify substances by reason of properties harmful
to health, safety or the indoor or outdoor environment (including harmful
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
toxicity, reproductive toxicity, "TCLP toxicity" or "EP toxicity" or words of
similar import under any applicable Environmental Laws), (2) any oil, petroleum,
petroleum fraction or petroleum derived substance, (3) any drilling fluids,
produced waters and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources, (4) any flammable
substances or explosives, (5) any radioactive materials, (6) any
asbestos-containing materials, (7) urea formaldehyde foam insulation, (8)
electrical equipment which contains oil or dielectric fluid containing
polychlorinated biphenyls, (9) pesticides, and (10) any other chemical, material
or substance, exposure to which is prohibited, limited or regulated by
governmental authority or which may or could pose a hazard to the health and
safety of the owners, occupants or any other persons in the vicinity of the
Facility or to the indoor or outdoor environment.
(D) "Hazardous Materials Activity" shall mean any past,
current, proposed or threatened activity, event or occurrence involving any
Hazardous Materials, including the use, manufacture, possession, storage,
holding, presence, existence, location, Release (as defined below), threatened
Release, discharge, placement, generation, transportation, processing,
construction, treatment, abatement, removal, remediation, disposal, disposition
or handling of any Hazardous Materials, and any corrective action or response
action with respect to any of the
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foregoing.
(E) "Release" shall mean any release, spill, emission,
leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge,
dispersal, dumping, leaching or migration of Hazardous Materials into the indoor
or outdoor environment (including, without limitation, the abandonment or
disposal of any barrels, containers or other closed receptacles containing any
Hazardous Materials), including the movement of any Hazardous Materials through
the air, soil, surface water or ground water.
(m) PERMITS. A list of all permits, approvals, licenses, certificates,
franchises, authorizations, consents and orders ("Permits") necessary to the
operation of the business of the Seller in the manner in which it is presently
conducted is set forth on Schedule 2.1(m) hereto. All such Permits are valid and
remain in full force and effect. The Seller has not engaged in any activity
which would cause revocation or suspension of any such Permits and no action or
proceeding looking to or contemplating the revocation or suspension of any
thereof is pending or threatened. No additional Permits will be required to
permit the Seller to continue its business substantially in the manner it is
presently conducted after the consummation of the transactions contemplated
hereby.
(n) TITLE TO PROPERTIES. The Transferred Assets constitute all assets
which have been used in the Business since December 31, 1997, and which are
necessary for the conduct of the Business. The Seller does not own any real
property. Except as set forth in Schedule 2.1(n) hereto, the Seller has good
title to all of the properties and assets (personal and mixed, tangible and
intangible) reflected on the Interim Balance Sheet or thereafter acquired or
which it purports to own (except properties or assets sold or otherwise disposed
of in the ordinary course of business consistent with past practice subsequent
to the date of the Interim Balance Sheet which in the aggregate did not have a
book value in excess of $5,000), free and clear of all mortgages, liens,
pledges, charges or encumbrances of any nature whatsoever, except those referred
to in the Interim Balance Sheet. Schedule 2.1(n) also contains an accurate list
setting forth all (i) real property leased (whether as lessor or lessee) or
subject to contract or commitment of purchase or sale or lease (whether as
lessor or lessee) by the Seller and (ii) significant personal property leased by
or to the Seller or subject to a title retention or conditional sales agreement
or other security device. All leases listed in Schedule 2.1(n) are valid,
binding and enforceable in accordance with their terms, and are in full force
and effect, except to the extent that enforceability may be limited by the
operation of bankruptcy, insolvency or similar laws; there are no existing
defaults by the Seller thereunder; no event of default has occurred which
(whether with or without notice, lapse of time or both) would constitute a
default by the Seller thereunder; and all lessors under such leases have
consented (where such consent is necessary) to the consummation of the
transactions contemplated by this Agreement without requiring modification of
the rights and obligations of the Seller under such leases. All of the tangible
property (whether owned or leased) included in the Transferred Assets are
located at the real property leased by the Seller as set forth in Schedule
2.1(n) hereto.
(o) ACCOUNTS RECEIVABLE; FIXED ASSETS.
(i) The accounts receivable reflected on the Interim Balance
Sheet are good and collectible in the ordinary course of business at the
aggregate recorded amounts thereof, less the amount of the reserve for bad
accounts reflected therein, and are not
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subject to any offsets. The accounts receivable of the Seller which were
thereafter added are good and collectible in the ordinary course of business at
the aggregate amounts recorded on the books of account, less the amount of the
reserve for bad accounts reflected therein (which reserve has been established
on a basis consistent with prior practice and in accordance with GAAP) and are
not subject to any offsets. Set forth on Schedule 2.1(o) is a true and complete
list of the Seller's accounts receivable as of June 30, 1998, and aging with
respect thereto.
(ii) Schedule 2.1(o) hereto contains a complete and accurate list
of all machinery, equipment and other fixed assets of the Seller (the
"Equipment") having a book value in excess of $250. Each such item of Equipment
is in good operating condition, normal wear and tear excepted, and is fit for
its intended use. Each such item has been maintained, in all material respects,
in accordance with its manufacturer's recommended maintenance practice and with
prudent business practice and no such maintenance has been deferred.
(p) INTELLECTUAL PROPERTY. Schedule 2.1(p) hereto lists all licenses,
patents, copyrights, or trademarks owned or used by the Seller in the conduct of
its business and all applications therefor (the "Intellectual Property"). No
officer or director, stockholder or employee of the Seller nor any of their
Affiliates or Associates has any ownership or other interest in any of the
Intellectual Property. To the best knowledge of the Seller and the Stockholders,
none of the Intellectual Property is being infringed upon by, or infringes, any
licenses, patents, copyrights, trademarks or other intellectual property rights
of any other person or entity. Except as set forth in Schedule 2.1(p), the
validity of the Intellectual Property and the title thereto of the Seller have
not been questioned in any litigation or governmental inquiry or proceeding to
which the Seller, is a party, and, to the best knowledge of the Seller and the
Stockholders, no such litigation, governmental inquiry or proceeding is
threatened. The conduct of the business of the Seller as presently conducted
does not conflict with valid licenses, trademarks, trademark rights, trade
names, trade name rights, service marks or patents of others in any way likely
to affect adversely, in any material respect, the Intellectual Property.
(q) TOLL FREE TELEPHONE NUMBERS. Schedule 2.1(q) hereto sets forth a
complete list of all Toll Free Telephone Numbers owned or used by the Seller in
the conduct of its business. No officer or director, stockholder or employee of
the Seller nor any of their Affiliates or Associates has any ownership or other
interest in the Toll Free Telephone Numbers. The Seller has not warehoused,
brokered or hoarded (as those terms are defined in the Second Report and Order
and Further Notice of Proposed Rulemaking in CC Docket No. 95-155, Released
April 11, 1997, by the Federal Communications Commission ("FCC")) any of the
Toll Free Telephone Numbers in violation of any applicable FCC rules or
regulations.
(r) INSURANCE. Schedule 2.1(r) hereto contains a complete and correct
list of all policies of insurance in which the Seller or its officers or
directors (in such capacity) is an insured party, beneficiary or loss payable
payee. Copies of all such policies have been previously provided to the Buyer.
Such policies are in full force and effect and in the reasonable judgment of the
Seller and the Stockholders provide the type and amount of coverage reasonably
required for the business of the Seller.
(s) BANK ACCOUNTS AND POWERS OF ATTORNEY. Schedule 2.1(s) hereto
contains a complete and correct list showing (i) the name of each bank in which
the Seller has an
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account or safe deposit box and the names of all persons authorized to draw
thereon or have access thereto, and (ii) the names of all persons, if any,
holding powers of attorney from the Seller.
(t) EMPLOYEE ARRANGEMENTS; ERISA. The Seller has (i) no union,
collective bargaining, employment, management, severance or consulting
agreements to which the Seller is a party or is otherwise bound, and (ii) no
deferred compensation agreements, pension and retirement plans, profit-sharing
plans, stock purchase and stock option plans. Schedule 2.1(t) hereto contains a
true and complete list of all compensation, incentive, bonus, severance,
disability, hospitalization, medical insurance, life insurance and other
employee benefit plans, programs or arrangements maintained by the Seller or
under which the Seller has any material obligations (other than obligations to
make current wage or salary payments) in respect of, or which otherwise cover,
any of the current or former officers, employees or consultants of the Seller,
or their beneficiaries (each an "Employee Benefit Plan" and collectively the
"Employee Benefit Plans"). No Employee Benefit Plan is subject to Title IV of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 412 of the Internal Revenue Code of 1986, as amended (the "Code"). All
contributions to and payments from the Employee Benefit Plans which may have
been required to be made in accordance with the Employee Benefit Plans have been
made or are properly accrued and reflected on the Balance Sheets or the books
and records of the Seller. Schedule 2.1(t) hereto also lists the names and
compensation of all persons employed by the Seller. Except as set forth on
Schedule 2.1(t) hereto, the Seller has no Employee Benefit Plans which are
qualified for Federal income tax exemption under Sections 401 and 501 of the
Code.
(u) CERTAIN BUSINESS MATTERS. Except as set forth in Schedule 2.1(u)
hereto (i) the Seller is not a party to or bound by any distributorship,
dealership, sales agency, franchise or similar agreement which relates to the
sale, distribution or servicing of the Toll Free Telephone Numbers or services
related thereto, (ii) the Seller does not have any sole-source supplier of
significant goods or services (other than utilities) with respect to which
practical alternative sources are not available on comparable terms and
conditions, (iii) there are not pending and, to the Seller's and the
Stockholders' best knowledge there are not threatened, any labor negotiations
involving or affecting the Seller and, to the Seller's and the Stockholders'
best knowledge, no organizing activities involving union representation exist in
respect of any of its employees, (iv) the Seller neither gives nor is bound by
any express warranties relating to its services and, to the best knowledge of
the Seller and the Stockholders, there has been no assertion of any breach of
warranties which could have a material adverse effect on the business or
condition (financial or otherwise) of the Seller and, to the best knowledge of
the Seller and the Stockholders, there are no problems or potential problems
with respect to any product sold or services provided by the Seller, (v) the
Seller is not a party to or bound by any agreement which limits its freedom to
compete in any line of business or with any person or entity, (vi) the Seller is
not a party to or bound by any agreement which based on current economic
circumstances will result in a loss when performed, and (vii) the Seller is not
a party to or bound by any agreement or involved in any transaction in which any
officer, director, debtholder or stockholder, or any Affiliate or Associate of
any such person has, or had when made, a direct or indirect material interest.
(v) CONTRACTS. Schedule 2.1(v) hereto contains a complete and correct
list of any and all contracts, commitments, obligations and undertakings,
written or oral, to which the Seller is a party or otherwise bound. True and
complete copies of all contracts,
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commitments, obligations and undertakings set forth in Schedule 2.1(v) hereto
have been furnished to Buyer, and except as expressly stated in Schedule 2.1(v),
each of them is in full force and effect, no person or entity which is a party
thereto or otherwise bound thereby is, to the best knowledge of the Seller and
the Stockholders, in default thereunder, and no event, occurrence, condition or
act exists which, with the giving of notice or the lapse of time or both, would
give rise to a default or right of cancellation thereunder, and the Seller is
not in default thereunder and no event, occurrence, condition or act exists by
or on behalf of the Seller which, with the giving of notice or the lapse of time
or both would give rise to a default by the Seller thereunder, and to the
Seller's and the Stockholders' best knowledge, there have been no threatened
cancellations thereof and there are no outstanding disputes thereunder. To the
best of the Seller's and the Stockholders' knowledge there is no reason why any
of the contracts listed on Schedule 2.1(v), could not be continued between Buyer
and the Seller's contractual partners on the same terms and conditions as
currently apply. Neither the Seller nor any Stockholder has any reason to
believe that any of the Seller's contractual partners will terminate its
relationship with the Seller as a result of the acquisition of the Seller's
assets by Buyer.
(w) BROKERS. No agent, broker, person or firm acting on behalf of the
Seller or the Stockholders or under the authority of any of the foregoing, is or
shall be entitled to a brokerage commission, finder's fee, or other like payment
in connection with any of the transactions contemplated hereby, from the Seller
or any of the Stockholders.
(x) DISCLOSURE. To the best knowledge of the Seller and the
Stockholders, no representation or warranty made by the Seller or the
Stockholders herein or in any of the Executed Agreements contains any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements therein not misleading.
(y) AFFILIATED TRANSACTIONS. Except as set forth in Schedule 2.1(y)
hereto, no Stockholder (i) is a party to any agreement, transaction or
arrangement (oral or written) with or involving the Seller or any Associate or
Affiliate of the Seller or any of its stockholders, or (ii) has any claim,
monetary or otherwise, of any sort against the Seller. Notwithstanding anything
to the contrary contained herein, each Stockholder hereby releases and
discharges the Seller from all claims, actions or suits that any of them now has
or may hereafter have against the Seller.
(z) CLAIMS AGAINST THE SELLER. Except as set forth in Schedule 2.1(z)
hereto, the Seller has no debts, obligations or liabilities owing to the
Stockholders and, to the best knowledge of the Seller, nothing exists that could
give rise to a claim by the Stockholders of any such debts, obligation or
liability of the Seller to the Stockholders.
(aa) DISCLOSURE SCHEDULES. All schedules to this Agreement are
integral parts to this Agreement. Nothing in a schedule shall be deemed adequate
to disclose an exception to a representation or warranty made herein, unless the
schedule identifies the exception with reasonable particularity and describes
the relevant facts in reasonable detail, including by explicit cross-reference
to another schedule to this Agreement. Without limiting the generality of the
foregoing, the mere listing, or inclusion of a copy, of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein, unless the representation or warranty is being made in
connection with the existence of the document or other item itself. The Seller
and the Stockholders are responsible for preparing and arranging the schedules
corresponding to the lettered and numbered paragraphs contained herein.
Disclosure
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made in a specific schedule shall not be deemed to have been disclosed with
respect to any other schedule unless an explicit cross-reference appears.
(bb) PRINCIPAL PLACE OF BUSINESS; RESIDENCE. The Seller's principal
place of business is located at 000 Xxxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000. Xxxxxx
X. Xxxxxxx and Xxxxxx X. Xxxxxxx reside at 0000 Xxxxxx Xxxxx Xxxxx, Xxxxx,
Xxxxxxx 00000. D. Xxxxx Xxxxxxx resides at 000 Xxxxxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxx 00000.
2.2 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each of the
Stockholders severally represents and warrants to, and covenants and agrees with
Buyer, with respect to such Stockholder as follows:
(a) CAPACITY; VALIDITY. Such Stockholder has the legal capacity to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed by such
Stockholder and constitutes a valid and binding obligation of such Stockholder
enforceable against him in accordance with its terms.
(b) RIGHTS TO TOLL FREE TELEPHONE NUMBERS. Such Stockholder does not
own or possess any rights in or to the Toll Free Telephone Numbers listed on
Schedule 2.1(q) hereto.
(c) INVESTMENT INTENT. Such Stockholder acknowledges that none of the
shares of Parent Common Stock are registered under the Securities Act or any
state securities laws. The shares of Parent Common Stock are being acquired by
such Stockholder for investment purposes only and not with a view to the
distribution or resale thereof. Such Stockholder has no present intention to
sell or otherwise dispose of the Parent Common Stock, except in compliance with
the provisions of the Securities Act.
(d) INFORMATION. Such Stockholder (i) has such knowledge and
experience in financial and business affairs that he/she is capable of
evaluating the merits and risks involved in purchasing the Parent Common Stock,
(ii) is able to bear the economic risks involved in purchasing the Parent Common
Stock, and (iii) has had the opportunity to ask questions of, and receive
answers from, Parent and persons acting on Parent's behalf concerning the terms
and conditions of the Parent Common Stock and to obtain any additional
information in connection therewith.
(e) ACCREDITATION. Such Stockholder is an accredited investor within
the meaning of Regulation D of the Securities Act.
(f) RESTRICTIONS ON TRANSFER.
(i) Such Stockholder agrees that he will not transfer or
otherwise dispose of (each, a "Transfer") any of the shares of Parent Common
Stock (or any interest therein) except upon the terms and conditions specified
herein and such Stockholder will cause any subsequent holder of such
Stockholder's shares of Parent Common Stock to agree to take and hold the shares
of Parent Common Stock subject to the terms and conditions of this Agreement, if
such shares of Parent Common Stock are required to include a legend pursuant to
Section 2.2(f)(ii) hereof.
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(ii) Each certificate representing the shares of Parent Common
Stock issued to the Stockholders or to any subsequent stockholder shall include
a legend in the following form; PROVIDED, HOWEVER, that such legend shall not be
required (and shall be removed) if a Transfer is being made in connection with a
sale of shares of Parent Common Stock registered under the Securities Act, or in
connection with a sale in compliance with Rule 144 under the Securities Act, as
such Rule may be amended from time to time (each a "Public Sale"):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW, AND MAY NOT
BE TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION THEREOF OR A VALID EXEMPTION THEREFROM.
(iii) Notwithstanding anything to the contrary in this Section
2.2(f), such Stockholder shall not Transfer any of the shares of Parent Common
Stock except to the extent permitted, and in accordance with, the Shareholders
Agreement referred to in Section 4.1(h) hereof.
2.3 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents and
warrants to, and covenants and agrees with, the Seller as follows:
(a) ORGANIZATION, STANDING AND POWER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with full corporate power and authority to own, lease and operate its
properties and to carry on its business as presently conducted by it and is
qualified in each other jurisdiction in which qualification is required for it
to own, lease and operate its properties and carry on its business as presently
conducted by it, except to the extent that failure to so qualify would not have
a material adverse effect on the financial condition, business or operations of
Buyer.
(b) AUTHORITY. The execution and delivery by Buyer of this Agreement
and of each of the other Executed Agreements to which it shall be a party, the
performance by Buyer of its obligations under this Agreement or such Executed
Agreements and the consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary corporate action
on the part of Buyer, and Buyer has all necessary corporate power with respect
thereto. This Agreement and the Executed Agreements are, or when executed and
delivered by Buyer shall be, the valid and binding obligations of Buyer,
enforceable in accordance with their respective terms, except to the extent that
enforceability may be limited by the operation of bankruptcy, insolvency or
similar laws. Neither the execution and delivery by Buyer of the Executed
Agreements, nor the consummation of the transactions contemplated thereby, nor
the performance by Buyer of its obligations under the Executed Agreements, shall
(nor with the giving of notice or the lapse of time or both would) (i) conflict
with or result in a breach of any provision of the Articles of Incorporation or
By-Laws of Buyer, (ii) violate any order, writ, injunction, decree, law,
statute, rule or regulation or (iii) interfere with or otherwise materially and
adversely affect the ability of Buyer to carry on its business as now conducted.
(c) BROKERS. No agent, broker, person or firm acting on behalf of
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Buyer or under its authority is or shall be entitled to a brokerage commission,
finder's fee, or other like payment in connection with any of the transactions
contemplated hereby.
2.4 REPRESENTATIONS AND WARRANTIES OF PARENT. Parent represents and
warrants to Seller and each of the Stockholders as follows:
(a) CAPITALIZATION. The authorized capital stock of Parent consists of
(i) 15,000,000 shares of Common Stock, par value $.001 per share, of which
100,000 shares are designated Class B Common Stock ("Class B Stock") and (ii)
7,000,000 shares of Series A Preferred Stock, par value $.001 per share.
2,485,000 shares of Common Stock are issued and outstanding or are reserved for
issuance against outstanding options and warrants, of which 90,500 shares are
Class B Stock, and 6,520,000 shares of Series A Preferred Stock are issued and
outstanding. The shares of the Parent Common Stock being transferred to the
Stockholders in accordance herewith shall be duly and validly issued and fully
paid and non-assessable. The transfer of such shares of Parent Common Stock to
the Stockholders as provided herein shall vest the Stockholders with good and
marketable title to the Parent Common Stock, free and clear of all liens,
charges, claims and encumbrances.
(b) ORGANIZATION, STANDING AND POWER. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with full corporate power and authority to own, lease and operate its
properties and to carry on its business as presently conducted by it and is
qualified in each other jurisdiction in which qualification is required for it
to own, lease and operate its properties and carry on its business as presently
conducted by it, except to the extent that failure to so qualify would not have
a material adverse effect on the financial condition, business or operations of
Parent.
(c) AUTHORITY. The execution and delivery by Parent of this Agreement
and of each of the other Executed Agreements to which it shall be a party, the
performance by Parent of its obligations under this Agreement or such Executed
Agreements and the consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary corporate action
on the part of Parent, and Parent has all necessary corporate power with respect
thereto. This Agreement and the Executed Agreements to which Parent shall be a
party are, or when executed and delivered by Parent shall be, the valid and
binding obligations of Parent, enforceable in accordance with their respective
terms, except to the extent that enforceability may be limited by the operation
of bankruptcy, insolvency or similar laws. Neither the execution and delivery by
Parent of such Executed Agreements, nor the consummation of the transactions
contemplated thereby, nor the performance by Parent of its obligations under
such Executed Agreements, shall (nor with the giving of notice or the lapse of
time or both would) (i) conflict with or result in a breach of any provision of
the Certificate of Incorporation or By-Laws of Parent, (ii) violate any order,
writ, injunction, decree, law, statute, rule or regulation or (iii) interfere
with or otherwise materially and adversely affect the ability of Parent to carry
on its business as now conducted.
3. COVENANTS. The Stockholders and the Seller jointly and severally
covenant and agree to perform or take any and all such actions to effectuate the
following from the date hereof until the Closing Date:
3.1 INVESTIGATION BY BUYER. Buyer may, prior to the Closing Date, through
its
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representatives (including its counsel, accountants and consultants) make such
investigations of the properties, offices and operations of the Seller and such
audit of the financial condition of the Seller as it deems necessary or
advisable in connection with the transactions contemplated hereby, including,
without limitation, any investigation enabling it to familiarize itself with
such properties, offices, operations and financial condition; such investigation
shall not, however, affect the Seller's or the Stockholders' representations,
warranties and agreements hereunder. The Seller and the Stockholders shall
permit Buyer and its authorized representatives to have, after the date hereof,
full access to the premises and to all books and records and Returns of the
Seller and Buyer shall have the right to make copies thereof and excerpts
therefrom. The Seller and the Stockholders shall furnish Buyer with such
financial and operating data and other information with respect to the Seller as
Buyer may from time to time reasonably request.
3.2 CARRY ON IN ORDINARY COURSE. Except with Buyer's prior written consent,
the Seller shall, and each Stockholder shall cause the Seller to, carry on its
business diligently and substantially in the same manner as heretofore
conducted, and shall not (a) enter into or agree to enter into any extraordinary
transaction, contract, lease or commitment, (i) declare any dividends, nor make
any distributions or payments to the Stockholders other than employment
compensation, (ii) redeem any shares of the Seller Stock or issue any capital
stock or enter into any agreement which grants a right to acquire any of the
Seller Stock, (iii) increase the compensation of any employee of the Seller,
other than ordinary year-end increases or enter into any severance agreement or
employment agreement with any employee of the Seller; (iv) loan or advance any
amounts to any officer, director, stockholder or employee of the Seller or enter
into any agreement with any of the foregoing or any person related to any of the
foregoing, (v) acquire or dispose of any assets, other than in the ordinary
course of business, and (vi) encumber or commit to encumber any of its assets,
(vii) take any action, or suffer any action to be taken, which could cause any
of the representations or warranties of any Stockholders or the Seller contained
herein not to be true and correct on and as of the Closing Date, (viii) repay
(including by way of offset) any Funded Debt except for regularly scheduled
payments thereof in accordance therewith, or (ix) enter into any agreement to
take any of the foregoing actions.
3.3 OTHER TRANSACTIONS. The Seller and the Stockholders shall not, and
shall cause the Seller's directors, officers, stockholders, employees, agents
and Affiliates or Associates not to, directly or indirectly, solicit or initiate
the submission of proposals from, or solicit, encourage, entertain or enter into
any arrangement, agreement or understanding with, or engage in any negotiations
with, or furnish any information to, any person, other than Buyer or a
representative thereof, with respect to the acquisition of all or any part of
the business or assets of the Seller or any of its securities. Should the Seller
or any of its Affiliates or Associates, during such period, receive any offer or
inquiry relating to such acquisition, or obtain information that such an offer
is likely to be made, they will provide Buyer with immediate written notice
thereof, which notice will include the identity of the prospective offeror and
the price and terms of any offer.
3.4 CONSENTS. The Stockholders shall cause the Seller to, and the Seller
shall, use its best efforts to obtain in writing, prior to the Closing Date, all
consents, approvals, waivers, authorizations and orders necessary or reasonably
required in order to permit it to effectuate this Agreement and to consummate
the transactions contemplated hereby (collectively, "Consents"). All such
Consents will be in writing and copies thereof will be delivered to Buyer
promptly after the Seller's receipt thereof but no later than immediately prior
to Closing.
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3.5 SUPPLEMENTAL DISCLOSURE. The Stockholders and the Seller agree that,
with respect to their representations and warranties made in this Agreement,
they will have a continuing obligation to promptly supplement or amend the
schedules hereto with respect to any matter hereafter arising or discovered
which, if existing or known at the date of this Agreement and on the Closing
Date, would have been required to be set forth or described in the schedules
hereto.
3.6 PUBLIC ANNOUNCEMENTS. The Stockholders and Buyer agree that they will
consult with each other before issuing any press releases or otherwise making
any public statements with respect to this Agreement or the transactions
contemplated hereby and any press release or any public statement shall be
subject to mutual agreement of the parties, except as may be required by the
disclosure obligations of Buyer under applicable securities laws.
4. CONDITIONS TO CLOSING.
4.1 CONDITIONS OF BUYER'S OBLIGATION TO CLOSE. The obligation of Buyer to
close under this Agreement is subject to the satisfaction of the following
conditions any of which may be waived by Buyer in writing at or prior to
Closing:
(a) DUE DILIGENCE. Buyer shall have completed, to its satisfaction,
its business, legal, tax and accounting due diligence.
(b) AGREEMENTS AND CONDITIONS. On or before the Closing Date, the
Stockholders and the Seller shall have complied with and duly performed all
agreements and conditions on their part to be complied with and performed
pursuant to or in connection with this Agreement on or before the Closing Date.
(c) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Stockholders and the Seller contained in this Agreement, or otherwise
made in connection with the transactions contemplated hereby, shall be true and
correct in all material respects on and as of the Closing Date with the same
force and effect as though such representations and warranties had been made on
and as of the Closing Date.
(d) LOSS, DAMAGE OR DESTRUCTION. Between the date hereof and the
Closing Date there shall not have been any loss, damage or destruction to or of
any of the assets, property or business of the Seller in excess of $10,000 in
the aggregate, whether or not covered by insurance, nor shall the assets,
properties, business or prospects of the Seller have been adversely affected in
any way as a result of any fire, accident, or other casualty, war, civil strife,
riot or act of God or the public enemy or otherwise.
(e) NO LEGAL PROCEEDINGS. No court or governmental action or
proceeding shall have been instituted or threatened to restrain or prohibit the
transactions contemplated hereby, and on the Closing Date there will be no court
or governmental actions or proceedings pending or threatened against or
affecting the Seller which involve a demand for any judgment or liability,
whether or not covered by insurance, and which may result in any material
adverse change in the business, operations, properties or assets or in the
condition, financial or otherwise, of the Seller.
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(f) CERTIFICATE. Buyer shall have received a certificate dated the
Closing Date and executed by the Stockholders and an authorized officer of the
Seller to the effect that the conditions expressed in Sections 4.1(b), 4.1(c),
4.1(d) and 4.1(e) have been fulfilled.
(g) CONSENTS. Buyer shall have received all Consents necessary to
effectuate this Agreement and to consummate the transactions contemplated
hereby.
(h) EMPLOYMENT AGREEMENT. Buyer shall have entered into an Employment
Agreement with D. Xxxxx Xxxxxxx, in form and substance satisfactory to Buyer.
(i) SHAREHOLDERS AGREEMENT. The Stockholders shall have entered into a
Shareholders Agreement, in form and substance satisfactory to Buyer.
(j) ESCROW AGREEMENT. The Seller and the Escrow Agent shall have
entered into the Escrow Agreement.
(k) LEASE AGREEMENT. Buyer and Xxxxxx X. Xxxxxxx, as trustee of the
Amended and Restated Xxxxxx X. Xxxxxxx Family Trust u/a/d 10/15/87, shall have
entered into a lease agreement covering the offices of Seller located at 000
Xxxxxxx Xxxxxx, Xxxxx, Xxxxxxx in form and substance satisfactory to Buyer.
(l) NAME CHANGE. Buyer shall have received a duly authorized and
executed document which amends the certificate of incorporation of the Seller to
change Seller's name to a name other than Answerphone or IOCOM, or any
derivative thereof or any similar name, and is otherwise in form for filing with
the Secretary of State of the State of Florida.
(m) CERTIFICATES OF STATUS. Buyer shall have received certificates
from the Secretary of State of the State of Florida and of each jurisdiction set
forth in Schedule 2.1(a) hereto, providing that the Seller has filed its most
recent annual report, has not filed articles of dissolution and is in good
standing in each such jurisdiction.
(n) OPINION OF COUNSEL. The Stockholders shall have furnished Buyer
with a favorable opinion of Xxxxxx X. Xxxxx, P.A., counsel for the Seller and
the Stockholders, dated as of the Closing Date, and in form and substance
satisfactory to Buyer.
(o) BILLS OF SALE. Buyer shall have received such bills of sale, deeds
of transfer, assignments and other documents in form and substance satisfactory
to Buyer conveying the Transferred Assets to Buyer.
(p) APPROVAL OF BUYER'S LENDER. Buyer shall have received the approval
of its lender, CIBC, to effectuate this Agreement and to consummate the
transactions contemplated hereby.
4.2 CONDITIONS OF THE STOCKHOLDERS' AND THE SELLER'S OBLIGATIONS TO CLOSE.
The obligations of the Stockholders and the Seller to close under this Agreement
are subject to the following conditions any of which may be waived by the Seller
in writing at or prior to Closing:
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(a) AGREEMENTS AND CONDITIONS. On or before the Closing Date, Buyer
shall have complied with and duly performed all agreements and conditions on its
part to be complied with and performed pursuant to or in connection with this
Agreement on or before the Closing Date.
(b) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Buyer contained in this Agreement, shall be true and correct in all material
respects on and as of the Closing Date with the same force and effect as though
such representations and warranties had been made on and as of the Closing Date.
(c) CLOSING CERTIFICATE. The Stockholders shall have received a
certificate dated the Closing Date and executed by an authorized officer of
Buyer to the effect that the conditions contained in Section 4.2(a) and (b) have
been fulfilled.
(d) ESCROW AGREEMENT. Buyer and the Escrow Agent shall have entered
into the Escrow Agreement.
5. FURTHER ASSURANCES. From time to time after the Closing, and without
further consideration, the Seller shall execute and deliver such other
instruments of conveyance, assignment, transfer and delivery and take such other
actions as Buyer may reasonably request in order more effectively to Transfer to
Buyer, to place Buyer in possession or control of, all of the rights,
properties, assets and businesses intended to be Transferred hereunder, to
assist in the collection of any and all such rights, properties and assets, and
to enable Buyer to exercise and to enjoy all of the rights and benefits of the
Seller with respect thereto.
6. TRANSFER TAXES. The Seller shall pay all income, gains, sales and excise
taxes, if any, incurred in connection with the transactions contemplated by this
Agreement. With respect to any item that is exempt from sales or use tax on any
basis, Buyer shall deliver to the Seller such certificates for such exemption as
the Seller may reasonably request. Except as hereinabove provided, the party
hereto which is responsible under applicable law shall bear and pay in their
entirety all other taxes and registration and transfer fees, if any, payable by
reason of the Transfer of the Transferred Assets pursuant to this Agreement.
Each party hereto will cooperate to the extent practicable in minimizing all
taxes (other than income taxes) and fees levied by reason of the Transfer of the
Transferred Assets.
7. INDEMNIFICATION.
7.1 SURVIVAL OF REPRESENTATIONS. The representations and warranties of the
Stockholders in this Agreement or in any document delivered pursuant hereto
shall survive the Closing Date for a period of eighteen (18) months and shall
then terminate; PROVIDED, HOWEVER, that (i) any such representation and warranty
shall survive the time it would otherwise terminate only with respect to claims
of which notice has been given as provided in this Agreement prior to such
termination and (ii) such time limitation shall not apply to the representations
and warranties set forth in Section 2.2(b) hereof, which shall survive
indefinitely, and Sections 2.1(g), 2.1(i), 2.1(l) and 2.1(n) hereof, which shall
survive until the expiration of the applicable statute of limitations.
7.2 INDEMNITORS; INDEMNIFIED PERSONS. For purposes of this Section 7, each
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party which, pursuant to this Section 7, shall agree to indemnify any other
person or entity shall be referred to, as applicable, as the "Indemnitor", and
each such person and entity who is entitled to be indemnified by any Indemnitor
shall be referred to as the "Indemnified Person" with respect to such
Indemnitor.
7.3 INDEMNITY OF THE SELLER AND THE STOCKHOLDERS. The Seller and the
Stockholders hereby jointly and severally agree to indemnify, hold harmless and
reimburse Buyer and its directors, officers, agents and employees from and
against any and all claims, liabilities, losses, damages and expenses incurred
by such Indemnified Persons (including reasonable attorneys' fees and
disbursements) which shall be caused by or related to or shall arise out of (a)
any material breach or alleged breach of any representation or warranty of the
Seller and the Stockholders contained in this Agreement, (b) any breach of any
covenant or agreement of Seller or the Stockholders contained in the Agreement
and (c) any failure by Seller to satisfy the Excluded Liabilities, and shall
reimburse such Indemnified Persons for all costs and expenses (including
reasonable attorneys' fees and disbursements) as they shall be incurred, in
connection with paying, investigating, preparing for or defending any action,
claim, investigation, inquiry or other proceeding, whether or not in connection
with pending or threatened litigation, which shall be caused by or related to or
shall arise out of such breach or alleged breach, whether or not any such
Indemnified Person shall be named as a party thereto and whether or not any
liability shall result therefrom. The Stockholders and the Seller further agree
that they shall not, without the prior written consent of Buyer settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder unless such settlement, compromise or consent shall include an
unconditional release of each Indemnified Person under this Section 7.3 from all
liability arising out of such claim, action, suit or proceeding.
7.4 INDEMNITY OF BUYER. Buyer hereby agrees to indemnify, hold harmless and
reimburse the Stockholders and the Seller and the Seller's directors, officers,
agents and employees from and against any and all claims, liabilities, losses,
damages and expenses incurred by them (including reasonable attorneys' fees and
disbursements) which shall be caused by or related to or shall arise out of (a)
any material breach or alleged breach of any representation or warranty of Buyer
contained in this Agreement, (b) any breach of any covenant or agreement of
Buyer contained in the Agreement and (c) any Assumed Liability and the operation
of the business after Closing, and shall reimburse such Indemnified Persons for
all costs and expenses (including reasonable attorneys' fees and disbursements)
as shall be incurred, in connection with paying, investigating, preparing for or
defending any action, claim, investigation, inquiry or other proceeding, whether
or not in connection with pending or threatened litigation, which shall be
caused by or related to or shall arise out of such breach or alleged breach,
whether or not such Indemnified Persons shall be named as a party thereto and
whether or not any liability shall result therefrom. Buyer further agrees that
it shall not, without the prior written consent of the Seller, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder unless such settlement, compromise or consent shall include an
unconditional release of the Stockholders and the Seller under this Section 7.4
from all liability arising out of such claim, action, suit or proceeding.
7.5 PROCEDURES FOR INDEMNIFICATION; DEFENSE. Promptly after receipt by an
Indemnified Person of notice of the commencement of any action or proceeding
with respect to
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which indemnification may be sought hereunder, such Indemnified Person shall
notify the Indemnitor of the commencement of such action or proceeding, but
failure to so notify the Indemnitor shall not relieve the Indemnitor from any
liability which the Indemnitor may have hereunder or otherwise, unless the
Indemnitor shall be materially prejudiced by such failure. If the Indemnitor
shall so elect, the Indemnitor shall assume the defense of such action or
proceeding, including the employment of counsel reasonably satisfactory to such
Indemnified Person, and shall pay the fees and disbursements of such counsel. In
the event, however, that such Indemnified Person shall reasonably determine in
its judgment that having common counsel would present such counsel with a
conflict of interest or alternative defenses shall be available to an
Indemnified Person or if the Indemnitor shall fail to assume the defense of the
action or proceeding in a timely manner, then such Indemnified Person may employ
separate counsel to represent or defend it in any such action or proceeding and
the Indemnitor shall pay the reasonable fees and disbursements of such counsel;
PROVIDED, HOWEVER, that the Indemnitor shall not be required to pay the fees and
disbursements of more than one separate counsel for all Indemnified Persons in
any jurisdiction in any single action or proceeding. In any action or proceeding
the defense of which the Indemnitor shall assume, the Indemnified Person shall
have the right to participate in such litigation and to retain its own counsel
at such Indemnified Person's own expense except as otherwise provided above in
this Section 7.5, so long as such participation does not interfere with the
Indemnitor's control of such litigation.
8. NON-COMPETITION; CONFIDENTIALITY.
8.1 NON-COMPETITION. Following the Closing Date and for a period of five
(5) years thereafter (the "Non-Competition Period"), the Seller and the
Stockholders shall not, directly or indirectly, (a) engage in any business or
activity that competes with the business in which the Seller or any of its
Affiliates is then engaged, anywhere in the contiguous United States (the
"Business"); (b) enter the employ of any person or entity engaged in any
business or activity that competes with the Business or render any consulting or
other services to any person or entity for use in or with the effect of
competing with the Business; or (c) have an interest in any business or activity
that competes with the Business, in any capacity, including, without limitation,
as an investor, partner, stockholder, officer, director, principal, agent,
employee, or creditor; PROVIDED, HOWEVER, that nothing herein shall prevent the
purchase or ownership by any Stockholder of less than 3% of the outstanding
equity securities of any class of securities of a company registered under
Section 12 of the Securities and Exchange Act of 1934, as amended.
Notwithstanding the foregoing, the Non-Competition Period shall be reduced to a
period of three (3) years solely for activities engaged in within the State of
Florida.
8.2 NO COMPETING INTERESTS. Each Stockholder hereby represents and warrants
to Buyer that he has no ownership or other interest in any business or activity
that competes, directly or indirectly, with the Business.
8.3 NON-DISRUPTION. Following the Closing Date and for a period of five (5)
years thereafter, the Seller and the Stockholders shall not, directly or
indirectly, interfere with, disrupt or attempt to disrupt any present or
prospective relationship, contractual or otherwise, between the Seller or any of
its Affiliates, on the one hand, and any of its customers, suppliers or
employees, on the other hand.
8.4 CONFIDENTIALITY. The Seller and the Stockholders shall not use for his
own
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behalf or divulge to any other person or entity any confidential information or
trade secrets of or relating to Buyer in any manner whatsoever (except as
authorized and required in connection with the Stockholders' relationship with
Buyer or any of its affiliates during the term of such relationship or except as
may be required under legal process by subpoena or other court order; PROVIDED,
HOWEVER, that the Stockholder shall give Buyer prompt prior written notice
thereof in order to contest such requirement or order). As used herein,
confidential information shall consist of all information, knowledge or data
relating to Buyer or any of its affiliates (including, without limitation, all
information relating to inventions, procedures and operations, processes and
methods, financial information, customer and prospective customer lists, prices
and trade practices) which is not in the public domain or otherwise published or
publicly available.
8.5 REMEDIES UPON BREACH. The Seller and the Stockholders acknowledge and
agree that (a) Buyer shall be irreparably injured in the event of a breach by a
Stockholder of any of his obligations under this Section 8; (b) monetary damages
shall not be an adequate remedy for such breach; (c) Buyer shall be entitled to
injunctive relief, in addition to any other remedy which it may have, in the
event of any such breach; and (d) the existence of any claims which Stockholder
may have against Buyer, whether under this Agreement or otherwise, shall not be
a defense to the enforcement by Buyer of any of its rights under this Agreement.
9. MISCELLANEOUS PROVISIONS.
9.1 CONFIDENTIALITY. The Seller, the Stockholders and Buyer agree not to,
directly or indirectly, without the prior written consent of the other, use or
disclose to any person, firm or corporation, any materials or information
obtained in Buyer's due diligence investigation of Seller not a part of the
Purchased Assets, or any of the terms of this Agreement, except as may be
required by the disclosure obligations of Buyer under applicable securities laws
or as may be required to be disclosed to the attorneys and/or accountants of the
parties hereto in connection with the transactions contemplated hereby.
9.2 NOTIFICATION. Each party hereto shall give the other party or parties
hereto prompt written notice of (a) the existence of any fact or the occurrence
of any event which constitutes, or with the giving of notice or the passage of
time or both would constitute, a breach of any representation or warranty of the
party giving such notice made herein or pursuant hereto and (b) the taking of
any action by the party giving such notice that would breach or violate, or
constitute a default under, any agreement or covenant of such party made herein
or pursuant hereto. The giving of any such notice shall not affect, modify or
limit in any way any representation, warranty, agreement or covenant of the
parties made herein or pursuant hereto.
9.3 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
9.4 NOTICES. All notices, requests, demands and other communications which
are required or may be given pursuant to the terms of this Agreement shall be in
writing and shall be deemed duly given when delivered by hand, or posted in the
United States mail by registered or certified mail with postage pre-paid, return
receipt requested, (a) if to Buyer, to Protocol Acquisition Sub 1, Inc., c/o
Protocol Communications, Inc. 0000 Xxxxxxxx Xxxx., Xxxxxxxx, Xxxxxxx 00000,
Attention: Xxxxxxx XxXxxx; copy to Xxxxxxx, Calamari & Xxxxxxx, 000 Xxxx Xxxxxx,
00
00
Xxx Xxxx, XX 00000, Attention: Xxxx X. Xxxxxxx, Esq., facsimile number: (212)
213-1199, and (b) if to the Seller or the Stockholders, to D. Xxxxx Xxxxxxx c/o
Answerphone of Florida, Inc. d/b/a IOCOM 000 Xxxxxxx Xxxxxx, Xxxxx, Xxxxxxx
00000, facsimile number: (000) 000-0000; copy to Xxxxxx X. Xxxxx, P.A. 000
Xxxxxxx Xxxxxx, Xxxxx X, Xxxxxxxxx, Xxxxxxx 00000; facsimile number: (407)
633-2356 or to such other address(es) as shall be specified by like notice to
the other parties.
9.5 AMENDMENTS. This Agreement may be amended or modified at any time prior
to the Closing Date, but only by a written instrument executed by all of the
parties hereto.
9.6 ENTIRE AGREEMENT. This Agreement (together with the other agreements,
certificates, instruments and documents delivered pursuant hereto) constitutes
the entire agreement among the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings, oral and
written, among the parties hereto with respect to the subject matter hereof.
9.7 APPLICABLE LAW. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the
internal laws of the State of Florida. The parties hereby consent to the
exclusive jurisdiction of Federal and Florida State courts located in the County
of Brevard and agree that service of process by certified mail, return receipt
requested, shall constitute personal service for all purposes hereof.
9.8 TERMINATION. This Agreement may be terminated at any time prior to the
Closing Date by any of the following:
(a) By mutual written agreement of Buyer and the Seller;
(b) By either Buyer or the Seller, if the Closing has not occurred by
August 12, 1998, upon written notice by such terminating party, provided that at
the time such notice is given a material breach of this Agreement by such
terminating party shall not be the principal reason for the Closing's failure to
occur;
(c) Subject to the provisions of Section 9.9 hereof, by Buyer, by
written notice to the Seller, if there has been a material violation or breach
of any of the Stockholders' or the Seller's covenants or agreements made herein
or in connection herewith or if any representation or warranty of the
Stockholders or the Seller made herein or in connection herewith proves to be
materially inaccurate or misleading; or
(d) Subject to the provisions of Section 9.9 hereof, by the Seller, by
written notice to Buyer, if there has been a material violation or breach of any
of Buyer's covenants or agreements made herein or in connection herewith or if
any representation or warranty of Buyer made herein or in connection herewith
proves to be materially inaccurate or misleading.
9.9 EFFECTS OF TERMINATION. If this Agreement is terminated as
provided in Section 9.8 hereof, then this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of any party hereto
(or any of their respective stockholders, officers, directors or employees),
except based on the agreements contained in Section 7.3 and 7.4 hereof;
PROVIDED, HOWEVER, that if Buyer terminates this Agreement pursuant to Section
9.8(c) hereof, or the Seller terminates this Agreement pursuant to Section
9.8(d) hereof, the non-terminating party
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shall remain liable for any breach hereof.
9.10 HEADINGS. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Agreement.
9.11 FEES AND DISBURSEMENTS. Buyer shall pay its own expenses, and the
fees and disbursements of the counsel, accountants or auditors retained by it in
connection with the preparation, execution and delivery of this Agreement and
the fees and expenses and disbursements of the counsel to the Seller and the
Stockholders shall be paid by the Stockholders.
9.12 ASSIGNMENT. This Agreement may not be assigned by the Seller or
any Stockholder without the prior written consent of Buyer. This Agreement may
not be assigned by Buyer, except for an assignment by Buyer to any Affiliate,
without the prior written consent of the Seller.
9.13 BINDING EFFECT; BENEFITS. This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their respective heirs,
legal representatives, successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any person other than
the parties hereto and their respective heirs, legal representatives, successors
and permitted assigns, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
9.14 SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have executed this
Asset Purchase Agreement the day and year first above written.
PROTOCOL ACQUISITION SUB 1, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------------
Name: Xxxxxxx X. XxXxxx
Title: President & CEO
PROTOCOL HOLDINGS, INC.
with respect only to Sections 1.5(a) and 2.4 hereof
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------------
Name: Xxxxxxx X. XxXxxx
Title: President & CEO
ANSWERPHONE OF FLORIDA, INC. d/b/a IOCOM
By: /s/ D. Xxxxx Xxxxxxx
-----------------------------------------------------
D. Xxxxx Xxxxxxx
President
STOCKHOLDERS:
/s/ Xxxxxx X. Xxxxxxx, Trustee
---------------------------------------------------------
Xxxxxx X. Xxxxxxx, as trustee of the Amended and
Restated Xxxxxx X. Xxxxxxx Family Trust u/a/d
10/15/87
/s/ Xxxxxx X. Xxxxxxx
---------------------------------------------------------
Xxxxxx X. Xxxxxxx, as trustee of the Amended and Restated
Xxxxxx X. Xxxxxxx Family Trust u/a/d
10/15/87
/s/ D. Xxxxx Xxxxxxx
---------------------------------------------------------
D. Xxxxx Xxxxxxx
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