1
EXHIBIT 10.17
ASSETS PURCHASE AGREEMENT
This Assets Purchase Agreement (this "Agreement"), executed as of the 16th day
of December, 1997 by and among InterVoice Acquisition Subsidiary, Inc., a
Nevada corporation ("Purchaser") that is a wholly owned subsidiary of
InterVoice, Inc., a Texas corporation ("InterVoice"); Integrated Telephony
Products, Inc., a Nevada corporation ("Seller"); and Xxxxx Xxxxxxxx (the
"Principal Shareholder");
WITNESSETH:
WHEREAS, Purchaser desires to purchase, and Seller and the Principal
Shareholder desire for Seller to sell, certain assets of Seller in accordance
with the terms set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Purchaser, Seller and the Principal Shareholder do hereby agree as follows:
I. AGREEMENT OF SALE AND PURCHASE
1.1 SALE AND PURCHASE. At the closing at Purchaser's offices in Dallas, Texas
at 9:30 a.m., local time, on January 16, 1998 or at such other place, time and
date as Purchaser, Seller and the Principal Shareholder may otherwise mutually
agree (the "Closing"), and subject to the terms of this Agreement, Purchaser
will purchase from Seller, and Seller will sell to Purchaser, all of the
Purchased Assets (as defined in Section 1.2 hereof) in consideration of (i)
Purchaser's payment to Seller of an aggregate cash consideration of $4 million
(the "Cash Consideration"), (ii) services pursuant to and in accordance with the
Service Agreement (as defined in Section 1.5), and (iii) the Common Stock (as
defined in Section 1.4). The Cash Consideration will be reduced by the Initial
Payment (as defined in Section 1.3 hereof). Upon execution of this Agreement,
Purchaser will prepay $500,000 of the Cash Consideration (the "Prepayment");
and at Closing, subject to satisfaction of the closing conditions set forth in
Section 4.2 (except to the extent any such conditions are waived by Purchaser
in accordance with Section 4.2) will pay $1.5 million of the Cash Consideration
to Seller by wire transfer in immediately available funds (based on wire
instructions provided by Seller) and deposit the remaining $1 million of the
Cash Consideration, together with the Common Stock, into escrow in accordance
with the provisions of Section 5.3. In the event that the Closing does not
occur, and the Purchased Assets are not acquired by Purchaser, because any of
the conditions of Sections 4.1 or 4.2 have not been fulfilled or waived, Seller
shall repay to Purchaser the Prepayment within five (5) days of the scheduled
Closing date, subject to the provisions of Sections 4.1(f) and 4.2(h).
1.2 PURCHASED ASSETS. The assets to be purchased by Purchaser from Seller
(collectively, the "Purchased Assets") are the Software (as defined in Section
1.3), the other Intellectual Property (as defined in Section 3.12) and the
Premises Lease
-1-
2
Agreements (as defined in Section 3.8). Purchaser is not assuming any
liabilities or obligations of Seller (other than any liability and obligations
under the Premises Lease Agreements and Service Agreement), and is not
acquiring any agreements or assets other than Purchased Assets.
1.3 SOFTWARE LICENSE. Contemporaneous with the execution of this Agreement,
Purchaser will initiate the payment of $1 million (the "Initial Payment"),
together with the Prepayment, by wire transfer in immediately available funds,
and complete the payment within thirty six (36) hours of execution of this
Agreement, based on wiring instructions provided by Seller. The Initial Payment
will both (i) be credited against the Cash Consideration otherwise payable at
Closing and (ii) constitute payment in full by Purchaser to Seller for a
nonexclusive, fully paid, perpetual and worldwide license in the form attached
hereto as Exhibit 1.3 (the "License") with respect to the "Software" as defined
therein. For purposes of the purchase of the Purchased Assets pursuant to this
Agreement, and for purposes of all references to the term Software in all
provisions of this Agreement, the term "Software" has the meaning ascribed to it
in Schedule 1.3, which meaning is the same as the meaning ascribed to the term
in the License except the Software purchased pursuant to this Agreement also
includes: (i) all copyrights, trade secrets and inventions included in, or
practiced in connection with, the Software (the License only includes a
non-exclusive license to practice such copyrights, inventions and trade secrets
subject to the terms of the License); and (ii) all marketing and sales promotion
documentation of Seller in any way relating to the Software. If the Closing does
not occur, the License will remain fully valid and enforceable in accordance
with its terms; provided, however, if the Closing does occur, the Cash
Consideration otherwise payable at the Closing will be reduced by the amount of
the Initial Payment. After the Closing occurs, Purchaser will own the Software.
The License includes the services specified therein.
1.4 COMMON STOCK. At the Closing Purchaser will cause InterVoice to issue
shares of InterVoice's common stock, no par value per share ("Common Stock"),
with an aggregate Fair Market Value of $500,000, for the account of Seller. The
shares of Common Stock will not be registered under any state or federal
securities laws. For purposes of this Section 1.4, "Fair Market Value" is based
upon the average closing price per share of InterVoice's Common Stock as
reported on the NASDAQ National Market, for the period of twenty-one
consecutive market trading days commencing on the date ten market trading days
prior to the date of execution of this Agreement, and continuing through the
date which is ten consecutive market trading days after the date of execution
of this Agreement.
1.5 SERVICE AGREEMENT. Purchaser will provide the warranty service and support
(the "Service Agreement") specifically required under the service and support
warranties specifically referenced in the six customer agreements (the "Six
Agreements") referenced in Schedule 1.5, for the remaining term of such
warranties as set forth in Schedule 1.5. Purchaser is only assuming the
warranty obligations specifically referred to in Schedule 1.5. Seller is not
assigning the Six Agreements to Purchaser and Purchaser is not assuming any
other obligations or liabilities under such Six Agreements.
-2-
3
1.6 INSTRUMENTS OF CONVEYANCE. At the Closing (and from time to time thereafter
as may be reasonably requested by Purchaser) Seller and the Principal
Shareholder will execute such bills of sale, assignments and other instruments
of conveyance as may be reasonably necessary to transfer the Purchased Assets
to Purchaser.
II. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to, and agrees with, Seller and the Principal
Shareholder that:
2.1 CORPORATE ORGANIZATION. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and has all
requisite corporate power and authority to own, lease and operate its property
and to carry on its business as now being conducted. No actions or proceedings
to dissolve Purchaser are pending or threatened.
2.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Purchaser has full corporate power
and authority to execute, deliver and perform this Agreement and to consummate
the transactions contemplated hereby. The execution, delivery and performance
by Purchaser of this Agreement have been duly authorized by all necessary
corporate action of Purchaser. This Agreement has been duly executed and
delivered by Purchaser and constitutes a valid and legally binding obligation
of Purchaser enforceable against it in accordance with its terms.
2.3 NONCONTRAVENTION. The execution, delivery and performance by Purchaser of
this Agreement and the consummation by it of the transactions contemplated
hereby do not and will not conflict with or result in a violation of any
provision of its articles of incorporation or bylaws.
2.4 BROKERAGE FEES. Neither InterVoice, Purchaser nor any of their respective
affiliates has retained any financial advisor, broker, agent or finder or paid
or agreed to pay any financial advisor, broker, agent or finder on account of
this Agreement or any transaction contemplated hereby.
2.5 INTERVOICE SHARES AND DISCLOSURE.
(a) When delivered at closing as contemplated by this Agreement, the Common
Stock will be duly and validly authorized and issued, fully paid and
nonassessable, free from all stamp-taxes, liens, and charges and will have been
issued in compliance with applicable federal and state securities laws.
(b) Purchaser hereby makes the representation below in this Section 2.5(b) with
respect to each of the following:
-3-
4
(1) Annual report of InterVoice to its shareholders for its fiscal year
ended February 28, 1997;
(2) Annual report of InterVoice on Form 10-K as filed with the
Securities and Exchange Commission (the "SEC") for InterVoice's
fiscal year ended February 28, 1997 (the "Form 10-K");
(3) Proxy Statement of InterVoice relating to its most recent annual
meeting of shareholders;
(4) Quarterly reports of InterVoice on Form 10-Q as filed with the SEC
for each of the first two fiscal quarters of InterVoice of the
current fiscal year (the "Forms 10-Q"), and all other reports have
been filed with the SEC after the filing of the report referred to
in (2) above and prior to the execution hereof.
Each of such documents, at the time it was prepared, and all of such documents
taken together, did not and do not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. All of the financial statements obtained in the foregoing documents
were prepared from the books and records of InterVoice. The audited financial
statements contained in the Form 10-K (the "Audited Financial Statements") were
prepared in accordance with generally accepted accounting principles, and
fairly and accurately reflect the financial position and condition of
InterVoice as at the dates and for the periods indicated. The unaudited
financial statements contained in the Forms 10-Q were prepared in a manner not
inconsistent with the basis of presentation used in the Audited Financial
Statements, and fairly present the financial position and condition of
InterVoice as at and for the periods indicated, subject to normal year end
adjustments, and InterVoice has no reason to believe that any of such
adjustments will be material.
III. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to, and agrees with, Purchaser as set
forth in this Article III.
3.1 CORPORATE ORGANIZATION. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. No actions or
proceedings to dissolve Seller are pending or threatened. Principal
Shareholder and Xxxxxxxx Xxxx own, respectively, 20,000 shares and 3,255 shares
of the twenty-five thousand (25,000) shares of common stock of Seller which are
authorized for issuance by Seller; such common stock constitutes all of the
authorized capital stock of Seller; there are no more than ten shareholders of
Seller; and there are no options, rights or other securities convertible into,
or exchangeable for, any capital stock of Seller. Principal Shareholder is the
only director of Seller, and was duly elected and continues to serve as a
director of Seller. Prior to Closing, CallFlow Technologies Corporation, a
Nevada corporation ("CFTC"), will be merged with and into Seller (the
"Merger"), and Seller will be the surviving corporation of the Merger.
-4-
5
Immediately prior to the Merger, CFTC will be a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada and
will have all requisite corporate power and authority to own, lease and operate
its property. Immediately prior to the Merger, Seller and CFTC will have full
corporate power and authority to execute and deliver and perform the Merger and
all agreements, documents and actions related thereto and to consummate the
transactions contemplated thereby. The execution, delivery and performance by
Seller and CFTC of the Merger and all documents and action related thereto will
have been duly authorized by all necessary corporate action of Seller and CFTC,
respectively, prior to the Merger. Prior to Closing, Seller and CFTC will enter
into all agreements necessary to consummate the Merger, and all such agreements
shall be duly executed and delivered by each of Seller and CFTC, and such
agreements will constitute valid and legally binding obligations of CFTC and
Seller enforceable against each of them in accordance with their terms, and the
Merger will be validly consummated. Any and all Purchased Assets owned, in the
control of and/or attributed to CFTC, in whole or in part, prior to the Merger
will be wholly owned by Seller, without Encumbrances (as defined in Section
3.6), upon consummation of the Merger. Seller represents and warrants that
unless otherwise specifically discussed in this Agreement and the schedules and
exhibits hereto, none of the disclosures, representations and covenants in this
Agreement will change in connection with or as a result of the Merger.
3.2 QUALIFICATION. Seller is duly qualified or licensed to do business as a
foreign corporation and is in good standing in the State of Colorado, which is
the only jurisdiction in which it owns, leases, or operates the Purchased
Assets or in which such qualification or licensing is required for the conduct
of its business.
3.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Seller has full corporate power and
authority to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
Seller of this Agreement, and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action of Seller. This Agreement has been duly executed and delivered by Seller
and the Principal Shareholder and constitutes a valid and legally binding
obligation of Seller and Principal Shareholder enforceable against them in
accordance with its terms.
3.4 NONCONTRAVENTION. The execution, delivery, and performance by Seller of
this Agreement and the consummation by it of the transactions contemplated
hereby do not and will not (i) conflict with or result in a violation of any
provision of the articles of incorporation or bylaws of Seller, (ii) conflict
with or result in a violation of any provision of, or constitute (with or
without the giving of notice or the passage of time or both) a default under,
or give rise (with or without the giving of notice or the passage of time or
both) to any right of termination, cancellation, or acceleration under, or
require any consent, approval, authorization, or waiver of, or notice to, any
party to, any bond, debenture, note, mortgage, indenture, lease, contract,
agreement, or other instrument or obligation to which Seller is a party or by
which Seller, its business, or any of the Purchased Assets may be bound or any
permit held by Seller or its business, (iii) result in
-5-
6
the creation or imposition of any Encumbrance upon any of the Purchased Assets,
or (iv) violate any applicable law binding upon Seller, its business, or any of
the Purchased Assets, except, in the case of clause (ii) above, for (A) such
consents, approvals, authorizations, and waivers that have been obtained and
are unconditional and in full force and effect and such notices that have been
duly given and (B) such consents, approvals, authorizations, waivers, and
notices that are disclosed on Schedule 3.4.
3.5 GOVERNMENTAL APPROVALS. No consent, approval, order, or authorization of,
or declaration, filing, or registration with, any governmental entity is
required to be obtained or made by Seller in connection with the execution,
delivery, or performance by Seller of this Agreement or the consummation by it
of the transactions contemplated hereby.
3.6 TITLE TO, AND CONDITION OF, THE PURCHASED ASSETS. Seller is the owner of,
and has good and marketable title to, all the Purchased Assets free and clear
of all mortgages, liens, security interests, restrictions, claims and
encumbrances of any nature whatsoever (collectively, "Encumbrances"), except
as set forth on Schedule 3.6 and as set forth in the Premises Lease Agreements.
Seller does not own any real estate. Upon Seller's transfer of the Purchased
Assets to Purchaser pursuant to this Agreement, Purchaser will have good and
marketable title to all the Purchased Assets free and clear of any
Encumbrances, except as set forth in the Premises Lease Agreements.
3.7 TAX MATTERS. Seller is in the process of conducting a comprehensive review
of tax liabilities to applicable taxing authorities which will be completed
prior to the date of Closing, accordingly, to the knowledge of Seller without
investigation, as of the date of execution of this Agreement Seller has (i)
duly filed all federal, state, local, and foreign tax returns required to be
filed by or with respect to it with the Internal Revenue Service ("IRS") or
other applicable taxing authority, (ii) paid, or adequately reserved against in
its financial statements (including the Unaudited Balance Sheet, as defined in
Section 3.10 hereof), all material taxes due, or claimed by any taxing
authority to be due, from or with respect to it, except taxes that are being
contested in good faith by appropriate legal proceedings and for which adequate
reserves have been set aside, and (iii) made all deposits required with respect
to taxes, in each such case to the extent that the failure to do so would
result in the imposition of any Encumbrance on the Purchased Assets except as
set forth on Schedule 3.7. As of the date of Closing, Seller will have (i) duly
filed all federal, state, local and foreign tax returns required to be filed by
or with respect to it with the IRS or other applicable taxing authority, (ii)
paid, or adequately reserved against in its financial statements (including the
Unaudited Balance Sheet) (as defined in Section 3.10 hereof), all material
taxes due, or claimed by any taxing authority to be due, from or with respect
to it, except taxes that are being contested in good faith by appropriate legal
proceedings and for which adequate reserves have been set aside as disclosed in
the applicable financial statements delivered to Purchaser pursuant to Section
3.10, and (iii) made all deposits required with respect to taxes, in each such
case to the extent that the failure to do so would result in the imposition of
any Encumbrance on the Purchased Assets. There has been no issue raised or
adjustment proposed (and none is pending) by the IRS or any other taxing
authority in connection with any tax returns relating to the Purchased Assets
or the operation of Seller's business. No waiver or extension of any
-6-
7
statute of limitations as to any federal, state, local, or foreign tax matter
relating to the Purchased Assets or the operation of the Seller's business has
been given by or requested from Seller.
3.8 LEASED PROPERTY. Set forth on Schedule 3.8 is a list and summary
description of the material terms of all leases under which Seller is the
lessee of real or personal property used or held for use in connection with the
operation of its respective business. The two lease agreements for the premises
at 00000 Xxxx Xxxxxxx Xxxxx reflected on Schedule 3.8 are defined as the
"Premises Lease Agreements". Seller has good and valid leasehold interests in
all such properties held by it under lease, except for the Premises Lease
Agreement covering Suite 600, and Seller will have a good and valid leasehold
interest in such Premises Lease Agreement covering Suite 600 on or before the
date of Closing. Seller is not in breach of or in default under, nor has any
event occurred which (with or without the giving of notice or the passage of
time or both) would constitute a default by Seller under, any of such leases,
and Seller has not received any notice from, or given any notice to, any lessor
indicating that it or such lessor is in breach of or in default under any of
such leases. To the best knowledge of Seller, none of the lessors under any of
such leases is in breach thereof or in default thereunder.
3.9 COMPLIANCE WITH LAWS. Seller has complied in all material respects with all
applicable statutes, laws, rules and regulations relating to the ownership or
operation of the Purchased Assets or the operation of its business (including
without limitation applicable laws relating to securities, properties, business
products, manufacturing processes, advertising and sales practices, employment
practices, terms and conditions of employment, wages and hours, safety,
occupational safety, health, environmental protection, product safety, and
civil rights), and Seller has not received any written notice, which has not
been dismissed or otherwise disposed of, that Seller has not so complied.
Seller is not charged or, to its best knowledge, threatened with, or, to the
best knowledge of Seller, under investigation with respect to, any violation of
any applicable law, statute, rule or regulation relating to any aspect of the
ownership or operation of the Purchased Assets or the operation of its
business.
3.10 FINANCIAL STATEMENTS. At least four (4) days prior to the Closing date,
Seller will deliver to Purchaser accurate and complete copies of an unaudited
balance sheet of the Seller as of the most recent date practicable, but no
earlier than November 30, 1997 (the "Unaudited Balance Sheet"), prepared by the
Seller's certified public accountant. The Unaudited Balance Sheet will (i)
represent actual bona fide transactions, (ii) be prepared from the books and
records of Seller in conformity with generally accepted accounting principles
consistently applied and (iii) will accurately, completely, and fairly present
in all material respects the financial position of the business of Seller as of
the date thereof. As of the Closing, the Unaudited Balance Sheet will reflect
that Seller's cash, cash equivalents and accounts receivable are, in the
aggregate (together with the Initial Payment, the Prepayment and $1.5 million
of the Cash Consideration), at least two hundred percent (200%) of the
aggregate of Seller's short term and long term debt and liabilities as
reflected in the Unaudited Balance Sheet (the "Financial Ratio").
-7-
8
3.11 AGREEMENTS.
(a) Listed on Schedule 3.11(a) are all of the following agreements, including
any and all modifications or amendments thereto, to which Seller is a party or
by which Seller is otherwise bound (written or oral, formal or informal)
(collectively, the "Agreements"): (i) all executory purchase, sales, license,
lease, service, distribution and similar agreements and purchase orders
involving customers, distributors or suppliers (for purposes of resale and/or
relicense) of Seller; (ii) all loan agreements, guarantees and promissory notes
(other than trade payables incurred in the ordinary course of business); (iii)
all other agreements related to the Purchased Assets; (iv) escrow agreements;
and (v) any and all other agreements which do involve, or might reasonably be
expected to involve, obligations or liabilities of Seller in excess of $ 10,000.
(b) Seller will: (i) within one week of execution of this Agreement, deliver to
Purchaser accurate and complete copies of the written Agreements and written
summaries of the oral Agreements listed on Schedule 3.11(a), and (ii) will,
within two weeks of execution of this Agreement, deliver to Purchaser, a list
of, and accurate and complete copies of, all nonexecutory purchase, sales,
license, lease, service, distribution and similar agreements and purchase
orders involving customers, distributors or suppliers (for purposes of resale
and/or relicense) of Seller, and such list will become Schedule 3.11(b) to
this Agreement and such agreements will be included in the definition of
Agreements in Section 3.11(a). No breach or default exists with respect to any
of such Agreements, and no event has occurred which, after the giving of notice
or the passage of time or otherwise, will result in any such breach or default,
except as set forth on Schedule 3.11(a).
(c) Seller has not received notice of any plan or intention of any other party
to any Agreement to exercise any right of offset with respect to, or any right
to cancel or terminate, any Agreement, and Seller does not know of any fact or
circumstance that would justify the exercise by any such other party of such a
right other than the automatic termination of such Agreement in accordance with
its terms, except as set forth in Schedule 3.11(a).
(d) Seller will fully perform in a timely manner all obligations it is required
to perform under any of the Agreements, other than, on and after the Closing
date, the Premises Lease Agreements and warranty service and support
specifically covered by the Service Agreement.
3.12 INTELLECTUAL PROPERTY. (a) Set forth on Schedule 3.12 is a list of all
trademarks, service marks, trade names, service names, brand names, web-site
names and addresses, and similar rights, and all registrations, applications,
licenses, and rights with respect to any of the foregoing (collectively, and
together with the Software, and any and all trade secrets, copyrights and
inventions of Seller related to the Software, are, the "Intellectual Property")
relating to or used or held for use in connection with the operation of
Seller's businesses. Schedule 3.12 specifies, as applicable: (i) the nature of
such Intellectual Property; (ii) the owner of such Intellectual Property; (iii)
the jurisdictions by or in which
-8-
9
such Intellectual Property has been issued or registered or in which an
application for such issuance or registration has been filed, including the
respective registration or application numbers; and (iv) all licenses,
sublicenses, and other agreements to which Seller is a party and pursuant to
which Seller or any other person is authorized to use such Intellectual
Property, including the identity of all parties thereto, a description of the
nature and subject matter thereof, the applicable royalty, and the term
thereof. No patent applications have been filed by Seller or Principal
Shareholder at any time, and no patent has been issued in the name of Seller or
Principal Shareholder.
(b) Seller has good and marketable title to, or is validly licensed to use, all
Intellectual Property used in connection with the business of Seller (including
information with respect to any trademark, service xxxx or other registrations
and any licenses, sublicenses or other agreements relating to such Intellectual
Property). Without limiting the foregoing, Seller owns and has good and
marketable title to the Software free and clear of all Encumbrances. Each item
of Intellectual Property is in full force and effect, Seller is in compliance
with all its obligations with respect thereto and no event has occurred which
permits, or upon the giving of notice or the passage of time or both would
permit, the revocation or termination of any Intellectual Property. There are
no proceedings pending or, to the best knowledge of Seller and the Principal
Shareholder, threatened against Seller or any direct or indirect customers of
Seller, asserting that their respective use of any such Intellectual Property
or any product sold, licensed or otherwise conveyed by Seller infringes or
infringed upon the rights of any other person or seeking the revocation,
termination or concurrent use of any such Intellectual Property, and there is
no basis for any such proceeding. To the best knowledge of Seller and the
Principal Shareholder, none of the Intellectual Property is being infringed
upon by any other person. None of such Intellectual Property is subject to any
outstanding judgment, order, writ, injunction or decree of any governmental
entity or to any agreement, arrangement or understanding, written or oral,
restricting the scope or use thereof. At the Closing, Purchaser will receive
good and marketable title to all such Intellectual Property free and clear of
any Encumbrances. Seller has only provided copies of the Software to its
customers in connection with the sale of voice and/or call automation systems
and only in executable code (not source code) and only pursuant to
non-exclusive licenses which reserve all ownership rights to Seller. The
representations and warranties set forth in Article 7 of the License are
specifically incorporated into this Agreement and such representations and
warranties will remain valid before and after the date of Closing.
3.13 LIABILITIES. Seller has no liabilities or obligations (whether accrued,
absolute, contingent, unliquidated, or otherwise, whether or not known to
Seller, and whether due or to become due) including, without limitation, any
liabilities or obligations with respect to any unpaid taxes, except the
liabilities specifically set forth on Schedule 3.13 (the "Unassumed
Liabilities"). Except as set forth on Schedule 3,13, all Unassumed Liabilities
have arisen in the ordinary course of Seller's businesses and none of Seller's
respective obligations thereunder are past due or subject to acceleration,
demand for payment or payment of a penalty. Notwithstanding this or any other
provision of this Agreement, any and all liabilities that arise under the
Premises Lease Agreements (to the extent the Premises Lease Agreements are
acquired by Purchaser) and Service Agreement
-9-
10
on and after the date of Closing (which liabilities are not based on any breach
of representation by Seller hereunder prior to the date of Closing), are not
"Unassumed Liabilities".
3.14 LEGAL PROCEEDINGS. There are no lawsuits or other legal proceedings
pending or threatened against or involving Seller or any of its properties
except as set forth on Schedule 3.14. The plaintiffs in the lawsuits on
Schedule 3.14 have made the settlement demands reflected in Schedule 3.14.
Seller has provided, or within one week of execution of this Agreement will
provide, Purchaser with copies of all complaints, responses and other pleadings
filed in court in such lawsuits. No judgment, order, writ, injunction or decree
of any governmental entity has been issued or entered against Seller which
continues to be in effect with respect to or affecting the Purchased Assets
and/or the operation of Seller's business. There are no proceedings pending or,
to the best knowledge of Seller, threatened seeking to restrain, prohibit, or
obtain damages or other relief in connection with this Agreement or the
transactions contemplated hereby or Seller's business.
3.15 EMPLOYEES. Set forth on Schedule 3.15 is a list of the name and dates of
employment by Seller of each employee of Seller as of December 12, 1997,
together with a description of the position of each such employee and the total
amounts of current annual salary, bonuses, and other compensation paid or
payable by Seller to each such employee for the current calendar year and the
immediately preceding calendar year. The bonuses and base salary for calendar
year 1997 for the employees have been aggregated for purposes of Schedule 3.15.
Seller will provide Purchaser, within seven days of execution of this
Agreement, with separate amounts of bonuses and base salary paid or payable for
calendar year 1997. Seller's employees as of the date of execution of this
Agreement include employees who, based on reasonable commercial standards, are
capable of maintaining and supporting the Software (including providing bug
fixes), providing the "Integration Services" (as such term is defined in the
License), and enhancing and upgrading the Software.
3.16 CONFIDENTIALITY, ASSIGNMENT AND SOFTWARE DEVELOPMENT. Set forth on
Schedule 3.16 is a list of all: (i) confidentiality agreements, and (ii)
assignment agreements with current employees of Seller. The Software has been
designed and developed solely by employees of Seller during the course of their
employment with Seller.
3.17 BOOKS AND RECORDS. All the books and records of Seller relating to the
Purchased Assets or Seller's business, including all personnel files, employee
data, and other materials relating to employees of Seller, are substantially
complete and correct, have been maintained in accordance with good business
practice and all applicable laws, and, in the case of the books of account,
accurately reflect the accounts of the Company. Such books and records
accurately and fairly reflect, in reasonable detail, all material transactions,
revenues, expenses, assets, and liabilities of Seller with respect to its
business.
-10-
11
3.18 SOLVENCY. Seller is not insolvent, nor will Seller be rendered insolvent
by the occurrence of the transactions contemplated by this Agreement. In
addition, immediately after giving effect to the consummation of the
transactions contemplated by this Agreement, (i) Seller will be able to pay its
debts as they become due, (ii) Seller will not have unreasonably small capital
and (iii) taking into account pending and threatened litigation, final
judgments against Seller in actions for money damages are not reasonably
anticipated to be rendered at a time when, or in amounts such that, Seller will
be unable to satisfy any such judgments promptly in accordance with their terms
(taking into account the maximum probable amount of such judgments in any such
actions and the earliest reasonable time at which such judgments might be
rendered). The cash available to Seller, after taking into account all other
anticipated uses of the cash of Seller, will be sufficient to pay all such
judgments promptly in accordance with their terms. As used in this Section, (x)
"insolvent" means that the sum of the present fair salable value of the
Seller's assets does not and will not exceed its debts and other probable
liabilities, and (y) the term "debts" includes any legal liability, whether
matured or unmatured, liquidated or unliquidated, absolute, fixed, or
contingent, disputed or undisputed, secured or unsecured.
3.19 ERISA. Except as set forth on Schedule 3.19, Seller and its affiliates
have never made or ever been required to make contributions to any program or
arrangement that is an "employee pension benefit plan," an "employee welfare
benefit plan," or a "multiemployer plan," as such terms are defined in Sections
3(2), 3(1) and 3(37), respectively, of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). Seller and all the affiliates of Seller have
paid and discharged promptly when due all liabilities and obligations arising
under ERISA or the Internal Revenue Code of a character which if unpaid or
unperformed might result in the imposition of a lien against any of the
Purchased Assets. For purposes of this Section only, an "affiliate" of any
person means any other person which, together with such person, would be
treated as a single employer under Section 414 of the Internal Revenue Code.
3.20 PERMITS. Set forth on Schedule 3.20 is a list of all licenses, permits,
franchises, consents, approvals, variances, exemptions, and other
authorizations of or from governmental entities ("Permits") held by Seller
which relate to Seller's businesses. Such Permits constitute all the permits
necessary or required for the ownership and operation of the Purchased Assets
and the conduct of Seller's businesses. Each of such Permits is in full force
and effect, Seller is in compliance with all its obligations with respect
thereto, and, to the best knowledge of Seller, no event has occurred which
permits, or with or without the giving of notice or the passage of time or both
would permit, the revocation or termination of any thereof. No notice has been
issued by any governmental entity and no proceeding is pending or, to the best
knowledge of Seller, threatened with respect to any alleged failure by Seller
to have any Permit.
3.21 ENVIRONMENTAL MATTERS. (a) Any property owned or leased by Seller (the
"Property") is not in violation of, or subject to any pending or, to the best
knowledge of Seller, threatened proceeding under, any applicable statute, law,
rule or regulation or any judgment, order, writ, injunction or decree of any
governmental entity pertaining to health, safety, the environment, Hazardous
Substances (as herein defined) or Solid Waste
-11-
12
(as herein defined) (collectively, the "Applicable Environmental Laws"),
including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986 (as amended, "CERCLA"), and the Resource
Conservation and Recovery Act of 1976, as amended by the Used Oil Recycling Act
of 1980, the Solid Waste Disposal Act Amendments of 1980, and the Hazardous and
Solid Waste Amendments of 1984 (as amended, "RCRA"). No asbestos, material
containing asbestos that is or may become friable, or material containing
asbestos deemed hazardous by applicable laws, has been installed in any
Property by Seller or any contractor retained by Seller or, to the best
knowledge of Seller, by any owner, lessee or contractor prior to Seller's
occupancy of the Property.
(b) To the best knowledge of Seller, the representations and warranties set
forth in this Section 3.21 would continue to be true and correct following
disclosure to the applicable governmental entities of all relevant facts,
conditions and circumstances, if any, pertaining to the Property.
(c) Seller has not obtained and is not required to obtain any permits to
construct, occupy, operate or use any buildings, improvements, fixtures,
equipment or other tangible property forming a part of the Purchased Assets by
reason of any Applicable Environmental Laws.
(d) The terms "Hazardous Substance" and "Release" shall have the meanings
specified in CERCLA, and the terms "Solid Waste" and "Disposal" (or "Disposed")
shall have the meanings specified in RCRA; provided that to the extent the laws
of the jurisdiction in which the Property is located establish a meaning for
the "Hazardous Substance", "Release", "Solid Waste", or "Disposal" (or
"Disposed") which is broader than that specified in either CERCLA or RCRA, such
broader meaning shall apply.
3.22 BROKERAGE FEES. Neither Seller nor the Principal Shareholder nor any of
their respective affiliates has retained any financial advisor, broker, agent
or finder or paid or agreed to pay any financial advisor, broker, agent or
finder on account of this Agreement or any transaction contemplated hereby.
3.23 THE SIX AGREEMENTS. The information set forth on Schedule 1.5 is true and
correct and all equipment, software, services and other products acquired under
the Six Agreements, have been fully delivered, rendered and accepted to and by
the applicable customers, except for the warranty services and support
expressly covered by the Service Agreement on and after Closing.
-12-
13
IV. CONDITIONS PRECEDENT TO CLOSING
4.1 CONDITIONS TO OBLIGATIONS OF SELLER AND THE PRINCIPAL SHAREHOLDER. The
respective obligations of Seller and the Principal Shareholder to consummate
the transactions contemplated by this Agreement (other than with respect to the
License and refund of the Initial Payment and Prepayment as set forth in
Sections 1.1 and 1.3 hereof) shall be subject to the fulfillment on or prior to
Closing of each of the following conditions, which conditions can be waived, in
whole or in part, only in a written document signed by Seller and Principal
Shareholder:
(a) REPRESENTATIONS AND WARRANTIES TRUE. All the representations and
warranties of Purchaser set forth in this Agreement shall be true
and correct in all material respects as of the date made and as of
the Closing.
(b) AGREEMENTS PERFORMED. Purchaser shall have performed all agreements
required by this Agreement to be performed by it on or prior to the
Closing.
(c) CERTIFICATE. Seller and the Principal Shareholder shall have received a
certificate executed by an executive officer of Purchaser, dated as
of the Closing, certifying that the conditions set forth in
Sections 4.1(a) and (b) hereof have been fulfilled.
(d) CONSULTING AGREEMENT. Purchaser shall have caused InterVoice to execute a
one (1) year consulting agreement with Principal Shareholder in
form and substance mutually satisfactory to the parties to this
Agreement (the "Lifshitz Agreement"). Pursuant to the Lifshitz
Agreement, Purchaser will pay Principal Shareholder $120,000
through twelve (12) equal monthly installments. Principal
Shareholder will provide any and all services reasonably requested
by InterVoice during the term of the Lifshitz Agreement that in any
way relate to the Purchased Assets. The Lifshitz Agreement will
include: (i) normal and customary confidentiality provisions; (ii)
a representation by Principal Shareholder not to solicit for
employment or employ, directly or indirectly, on behalf of himself,
any company or other person for a period of five years from the
Closing Date, any Former Employee (as defined in Section 7.5(a)),
and/or any employee of Seller as of the date this Agreement is
executed to whom Purchaser or InterVoice makes an offer of
employment (with compensation equal to or in excess of the
compensation paid to such employee by Seller for the calendar year
ended December 31, 1997) prior to the date of Closing, and (iii)
the non-compete provision set forth on Schedule 4.1(d) hereto.
The representations set forth in the prior sentence will
automatically terminate if the Lifshitz Agreement is terminated
based on a default by Purchaser, which is not substantially cured
within 30 days of the date that written notice of such default is
received by Purchaser. Purchaser will promptly pay any and all
reasonable, authorized expenses incurred by Principal
-13-
14
Shareholder in connection with services rendered pursuant to the
Consulting Agreement.
(e) FINDERS FEE AGREEMENT. Purchaser shall have caused InterVoice to execute
a finders fee agreement in form and substance mutually satisfactory
to Seller and Purchaser, pursuant to which Seller will receive a
finders fee for any specific sales opportunity identified to
Purchaser or InterVoice on or before the Closing Date, provided the
sales opportunity results in a sale to Purchaser or to InterVoice
within one-hundred eighty (180) days after the Closing. The
finder's fee will equal five percent (5%) of the aggregate purchase
price of the software licenses, equipment and services sold by
Purchaser or InterVoice (less any applicable taxes, freight,
duties, tariffs or similar charges) as a result of the specific
identified opportunities.
(f) BOARD AND SHAREHOLDER APPROVAL. The transactions contemplated in order to
close this Agreement and consummate the transaction contemplated
hereunder shall have been approved by the Boards of Directors and
shareholders of Seller. If the Closing does not occur solely
because the Board of Directors and/or shareholders of Seller do not
approve the transactions contemplated by this Agreement and the
Closing, then Seller shall refund to Purchaser $250,000 of the $1
million paid for the License, and such refund shall not in any way
affect the License or Purchaser's rights with respect to the
License, which License will remain fully enforceable, paid up and
royalty free.
(g) ESCROW AGREEMENT. Purchaser, Seller and an escrow agent will enter into a
mutually acceptable Escrow Agreement for the Escrowed Funds in
accordance with Section 5.3.
4.2. CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of Purchaser to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment on or prior to the Closing of each of the following conditions,
which conditions can be waived, in whole or in part, only in a written document
signed by Purchaser:
(a) REPRESENTATIONS AND WARRANTIES TRUE. All the representations and
warranties of Seller set forth in this Agreement shall be true and
correct in all material respects as of the date made and as of the
Closing.
(b) AGREEMENTS PERFORMED. Seller and Principal Shareholder shall have
performed all agreements required by this Agreement to be performed
by it or him on or prior to the Closing.
(c) CERTIFICATE. Purchaser shall have received a certificate executed by an
executive officer of Seller, dated as of the Closing, certifying
that the conditions set forth in Sections 4.2(a) and (b) hereof
have been fulfilled.
-14-
15
(d) CONSULTING AND EMPLOYMENT AGREEMENTS. Purchaser shall have received the
Lifshitz Agreement and the employment agreements between InterVoice
and those employees of Seller listed on Schedule 4.2(d) hereto
(which employment agreements shall be offered to such employees on
terms reasonably satisfactory to InterVoice and Purchaser, and will
provide for compensation which is equal to or greater than
compensation that was paid by Seller to the applicable employee for
the calendar year ending December 31, 1997).
(e) RELEASE OF LIEN. The lien in favor of Athena International, LLC on
Seller's accounts receivable, machinery, equipment and any other
assets shall: (i) have been released and Seller and the Principal
Shareholder shall have provided Purchaser with satisfactory
evidence of such release; or (ii) be subject to an opinion of
Seller's counsel, as set forth in Section 4.2(g), that such lien is
not an Encumbrance on the Purchased Assets.
(f) UNASSUMED LIABILITIES AND LAWSUITS. Seller shall provide Purchaser with
reasonable evidence that all Unassumed Liabilities which are due
and payable on or before the date of Closing, including without
limitation any and all amounts due to any taxing authority in any
jurisdiction, have been fully paid and discharged.
(g) OPINION OF SELLER'S COUNSEL. Purchaser shall have received an opinion of
Solomon Xxxxx Xxxx & Xxxxx LLP, legal counsel to Seller and the
Principal Shareholder, with respect to the matters set forth on
Schedule 4.2(g).
(h) BOARD APPROVAL. The transactions contemplated by this Agreement shall
have been approved by the respective Boards of Directors of
InterVoice and Purchaser. If the Closing does not occur solely
because the Board of Directors of InterVoice and Purchaser do not
approve the transactions contemplated by this Agreement and the
Closing, then Purchaser will pay Seller $250,000 and such payment
shall be made by Seller retaining $250,000 of the Prepayment, and
refunding to Purchaser the remaining $250,000.
(i) CONSENTS AND APPROVALS. All consents and approvals required pursuant to
this Agreement, and to consummate the transactions contemplated by
this Agreement, have been received. If Purchaser waives any consent
or approval required with respect to any Premises Lease Agreement,
such Premises Lease Agreement will be excluded from the Purchased
Assets.
(j) ESCROW AGREEMENT. Purchaser, Seller and an escrow agent will enter into a
mutually acceptable Escrow Agreement for the Escrowed Funds in
accordance with Section 5.3.
-15-
16
(k) INVESTMENT LETTER. Seller will sign and deliver an investment letter
substantially in the form of the letter attached hereto as Schedule
4.2(k).
V. INDEMNIFICATION
5.1 INDEMNIFICATION BY PURCHASER. Purchaser will indemnify and hold harmless
Seller and the Principal Shareholder (the "Purchaser Indemnity") from and
against all losses, claims and liabilities of any nature whatsoever (including
reasonable attorneys' fees and expenses) (collectively, the "Seller Claims")
resulting from (i) the breach by Purchaser of any provision of this Agreement
(including without limitation the representations and warranties set forth in
Article II hereof); and/or (ii) from the use by Purchaser of the Purchased
Assets after the date of Closing, to the extent and only to the extent, that
such losses, claims and/or liabilities are not based on any breach of this
Agreement, including without limitation any breach of representations,
warranties or covenants under this Agreement, by Seller or the Principal
Shareholder. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, PURCHASER'S
AGGREGATE LIABILITY UNDER, AND/OR ARISING IN CONNECTION WITH, THIS AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED HEREUNDER, FOR ANY AND ALL CLAIMS AND LOSSES,
INCLUDING WITHOUT LIMITATION ANY AND ALL CLAIMS WITH RESPECT TO THE PURCHASER
INDEMNITY, AND ANY AND ALL OTHER CLAIMS FOR ACTUAL, CONSEQUENTIAL, INCIDENTAL
OR PUNITIVE DAMAGES, WILL IN NO EVENT EXCEED $4.5 MILLION.
5.2 INDEMNIFICATION BY SELLER; SHAREHOLDER GUARANTY. Seller indemnifies and
holds harmless Purchaser and InterVoice (the "Seller Indemnity") from and
against all losses, claims and liabilities of any nature whatsoever (including
reasonable attorneys' fees and expenses) (collectively, the "Purchaser Claims")
resulting from (i) the breach by Seller of any provision of this Agreement
(including without limitation the representations and warranties set forth in
Article III hereof); and/or (ii) the conduct of Seller's business prior to the
Closing. The Principal Shareholder irrevocably, absolutely and unconditionally
guarantees to Purchaser the prompt, complete, and full payment when due, and no
matter how the same shall become due, of the Seller Indemnity, including all
obligations thereunder (the "Shareholder Guaranty"). The Shareholder Guaranty
is primary and not secondary and is a guaranty of Seller's performance of the
Seller Indemnity and not merely a guaranty of collection of any amounts due
thereunder, and Purchaser is not required to pursue or exhaust its remedies
against Seller with respect to the Seller Indemnity before enforcing
Purchaser's rights and remedies with respect to the Shareholder Guaranty.
NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS AGREEMENT, THE AGGREGATE LIABILITY
OF BOTH SELLER AND THE PRINCIPAL SHAREHOLDER UNDER, AND/OR ARISING IN
CONNECTION WITH, THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREUNDER,
FOR ANY AND ALL CLAIMS AND LOSSES, INCLUDING WITHOUT LIMITATION ANY AND ALL
CLAIMS WITH RESPECT TO THE SELLER INDEMNITY, THE SHAREHOLDER GUARANTY
-16-
17
AND ANY AND ALL OTHER CLAIMS FOR ACTUAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE
DAMAGES, WILL IN NO EVENT EXCEED $4.5 MILLION.
5.3 ESCROW AGREEMENT. In order to secure the obligations of Seller and the
Principal Shareholder under this Agreement, Purchaser shall deposit $1 million
of the Cash Consideration and the Common Stock (collectively, the "Escrowed
Funds") into escrow for a maximum of one (1) year from the Closing date
(subject to the last sentence of this Section 5.3) pursuant to the terms of an
escrow agreement (the "Escrow Agreement"), which will be executed as a Closing
condition to this Agreement. If and when Seller presents Purchaser with
evidence reasonably satisfactory to Purchaser at any time within one year of
the Closing date, that two of the three lawsuits set forth on Schedule 3.14
have been fully terminated, and that all claims that have been made or could
have been made in connection with such proceedings have been dismissed with
prejudice by a court of competent jurisdiction, the Common Stock will be
released from the escrow. Notwithstanding any other provision of this Section
5.3, $1 million of the Cash Consideration will remain Escrowed Funds and will
not be released from the escrow after the first annual anniversary of the
Closing, until if and when Seller has presented Purchaser with evidence
reasonably satisfactory to Purchaser that all three lawsuits set forth on
Schedule 3.14 have been fully terminated, and that all claims that have been
made or could have been made in connection with such proceedings have been
dismissed with prejudice by a court of competent jurisdiction.
5.4 BASKET. No Seller Indemnity shall be required to be made by Seller pursuant
to this Article V with respect to any Purchaser Claims with respect to which
Purchaser provides Seller written notice during the one-year period commencing
on the Closing and ending on the first anniversary thereof except to the extent
the aggregate amount of all Purchaser Claims exceeds $100,000. No Seller
Indemnity shall be required to be made by Seller pursuant to this Article V
with respect to any Purchaser Claims with respect to which Purchaser provides
Seller written notice during the four-year period commencing on the first
anniversary of the Closing and ending on the fifth anniversary thereof except
to the extent the aggregate amount of all Purchaser Claims since the Closing
exceeds $200,000.
5.5 SURVIVAL. The respective representations and warranties of Purchaser and
Seller set forth in this Agreement or in any certificate, instrument or
document delivered pursuant hereto shall survive the Closing for three years;
provided, however, the representations and warranties of Seller set forth in
Sections 3.7 Tax Matters and 3.12 Intellectual Property shall survive the
Closing for five years (such three or five year period being herein called the
"Survival Date"). Neither Purchaser nor Seller shall have any indemnification
obligations under this Article V unless prior to the applicable Survival Date
such party shall have received notice from the other party hereto of the Seller
Claims or Purchaser Claims, as applicable, with respect to which
indemnification is sought.
-17-
18
VI. CERTAIN COVENANTS
6.1 PAYMENT OF OBLIGATIONS. As soon as reasonably possible (and, in any event,
prior to such becoming past due, delinquent or a contractual breach), Seller
will (i) pay or otherwise satisfy all Unassumed Liabilities; (ii) perform all
obligations of Seller under the Agreements; and (iii) provide Purchaser with
evidence reasonably satisfactory to it of such payment, satisfaction and
performance that occurs prior to Closing.
6.2 CHANGE OF CORPORATE NAMES AND TERMINATION. Upon Closing, Seller will
immediately terminate the employment of all employees of Seller to whom
Purchaser or InterVoice has made an offer of employment (with compensation
equal to or in excess of the compensation paid to such employee by Seller for
the calendar year ended December 31, 1997). Within ten days after the Closing
Seller will change its corporate name or names so as not to include "Integrated
Telephony Products, Inc." or any derivative thereof or "CallFlow Technologies
Corporation" or any derivative thereof.
VII. MISCELLANEOUS PROVISIONS
7.1 TAX ALLOCATIONS. Purchaser and Seller will allocate the Cash Consideration
among the various Purchased Assets for purposes of Form 8594 and any other
filings with the IRS in accordance with a tax allocation schedule to be
mutually agreed to between Seller and Purchaser at the Closing.
7.2 SALES TAX. Seller will pay any sales, use or similar tax in connection with
Purchaser's purchase of the Purchased Assets and the transactions contemplated
by this Agreement.
7.3 GOVERNING LAW. This Agreement will be governed by, and construed in
accordance with, the laws of the State of Texas.
7.4 NOTICES. Any notice or other communication required or permitted by this
Agreement shall be in writing and shall be deemed sufficient if delivered
personally, or if transmitted by first class registered or certified mail,
postage prepaid with return receipt requested, or if sent by prepaid overnight
delivery service, or if sent by cable, telegram, telefax or telex, to the
parties at the following addresses (or at such other addresses as shall be
specified by the parties by like notice):
-18-
19
If to Purchaser:
InterVoice Acquisition Subsidiary, Inc.
00000 Xxxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxx-Xxx X. Xxxxxx
Chief Financial Officer and Controller
With a copy to:
InterVoice, Inc.
00000 Xxxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxx
Vice President and Corporate Counsel
If to Seller and the Principal Shareholder:
Xx. Xxxxx Xxxxxxxx
Integrated Telephony Products, Inc.
00000 Xxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
With a copy to:
Solomon Xxxxx Xxxx & Xxxxx LLP
Mile High Center
0000 Xxxxxxxx, #0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
7.5 COOPERATION.
(a) Prior to Closing. Between the date of this Agreement and the Closing,
Seller will (i) conduct the business of Seller in the ordinary course of
business and in accordance with past practice, (ii) obtain Purchaser's prior
written approval before selling or disposing of any material assets or entering
into any contract, (iii) discuss with Purchaser any sales opportunity that
arises prior to the date of Closing, such that the parties may mutually agree
upon how the sales opportunity should be pursued, and (iv) use their best
efforts to retain, and assist Purchaser in its efforts to employ on and after
Closing on behalf of itself and InterVoice, such employees of Seller as
Purchaser may designate. Seller and Principal Shareholder on the one hand, and
Purchaser on the other hand, acknowledge and agree to cooperate with, and
provide reasonable assistance to, the other party or parties in the fulfillment
of their conditions and obligations under this Agreement, including without
limitation, Purchaser's due diligence review in connection with warranties and
representations made by Seller and the transactions contemplated by this
Agreement. Purchaser will cooperate with Seller in connection with its due
diligence
-19-
20
review in order to avoid harming Seller's relationships with its employees,
customers, creditors and suppliers. This Section 7.5 will not be construed to
in any way indicate that, Seller and Principal Shareholder on the one hand, and
Purchaser on the other hand, is in any way responsible for the representations,
warranties, covenants, conditions or other obligations of the other party or
parties. Seller will provide Purchaser with the names and titles of all former
employees of Seller who were at any time employed by Seller during the twelve
month period preceding the date of execution of this Agreement (the "Former
Employees"). Seller will provide Purchaser with reasonable assistance to
determine the relevant technical skills and capabilities of such Former
Employees and to assist Purchaser to contact such Former Employees.
(b) Pre-Closing Sales. Seller and Purchaser will cooperate to mutually
agree upon what to do with any sale by Seller which is completed between the
date of execution of this Agreement and the date of Closing pursuant to a
signed and enforceable sales and/or license agreement ("Pre-Closing Sales"). It
is the intention of the parties to cooperate in good faith to close each
Pre-Closing Sale and for Purchaser to take an assignment of the Pre-Closing
Sale subject to: (i) the parties mutually agreeing upon the terms and
conditions of the Pre-Closing Sale (including, without limitation, price,
payment, delivery, currency and credit terms); and (ii) Seller and Purchaser
splitting the profits associated with the Pre-Closing Sale. For purposes of
this Section 7.5(b), the profit for the Pre-Closing Sale will equal the
purchase price for all services, equipment and software licenses purchased,
minus any freight, taxes, duties, tariffs and the cost to Seller of third party
equipment and software licenses resold by Seller (and paid for by Seller in
full prior to Closing) as part of the Pre-Closing Sale.
(c) Announcements. Seller and Purchaser shall, and Purchaser shall cause
InterVoice to, cooperate in good faith in the preparation and public
announcement of all press releases and other announcements concerning the
license and/or acquisitions contemplated by this Agreement. Seller, Purchaser
and InterVoice shall each use their best efforts to accurately describe the
license and/or acquisitions contemplated under this Agreement.
7.6 ENTIRE AGREEMENT; NO ASSIGNMENT. This Agreement, together with the
Non-Disclosure Agreement between Purchaser and Seller, constitutes the entire
agreement among Purchaser, Seller and the Principal Shareholder with respect to
the subject matter hereof. This Agreement will be binding upon, and will inure
to the benefit of, Purchaser and Seller and their respective successors and
permitted assigns and the Principal Shareholder and his heirs, legal
representatives and permitted assigns. No party may assign this Agreement
without the prior written consent of the other parties hereto; provided,
however, Purchaser may assign this Agreement or any rights hereunder to
InterVoice.
7.7 SEVERABILITY. If any provision of this Agreement is held to be
unenforceable, this Agreement shall be considered divisible and such provision
shall be deemed inoperative to the extent it is deemed unenforceable, and in
all other respects this Agreement shall remain in full force and effect;
provided, however, if any such provision may be made
-20-
21
enforceable by limitation thereof, such provision shall be deemed to be so
limited and shall be enforceable to the maximum extent permitted by applicable
law.
7.8 ARBITRATION. If after the Closing with respect to Seller and the
Principal Shareholder, on the one hand (collectively, the "Selling Parties"),
or Purchaser, on the other hand, there exists any claim, controversy, dispute
or other matter in question arising out of or relating to this Agreement (the
"Disputed Matter"), the Selling Parties and Purchaser shall meet in Dallas,
Texas, at a mutually agreed date and time within 30 days after the Selling
Parties' or Purchaser's receipt of notice from the other party or parties
requesting such meeting to resolve the Disputed Matter. If as a result of such
meeting or any mutually agreed subsequent meeting held within 30 days
thereafter the Selling Parties and Purchaser are unable to agree on an
appropriate resolution of the Disputed Matter, then such matter shall be
determined by binding arbitration to be conducted before three arbitrators in
Dallas, Texas in accordance with the Texas Rules of Evidence and, unless
inconsistent, the Commercial Arbitration Rules of the American Arbitration
Association as then in effect. Selling Parties and Purchaser shall each appoint
one arbitrator within 30 days of receipt from the other party or parties of
written notice requesting arbitration, and such two arbitrators will appoint a
third arbitrator within 30 days after the second such arbitrator has been
appointed. In the event that either the Selling Parties or Purchaser shall fail
to appoint an arbitrator within the 30-day period, the arbitrator appointed by
the other party or parties shall serve as sole arbitrator in determining the
Disputed Matter. In the event the two arbitrators appointed by the parties are
unable to agree on a third arbitrator within the required 30-day period, then
either such arbitrator may petition any judge on the United States District
Court for the Northern District of Texas (acting in his or her individual and
not judicial capacity) to appoint such third arbitrator. Any arbitration
decision shall be final and conclusive upon the Selling Parties and Purchaser.
A judgment on the award entered by the arbitrators may be entered in any court
of appropriate jurisdiction, or application may be made to any such court for
judicial acceptance of the award and an order of enforcement, as the case may
be. The expenses of such arbitration, including the fees of the arbitrators,
shall be divided equally between the Selling Parties, on the one hand, and
Purchaser, on the other hand, unless otherwise specified in the award. Each
party shall pay the fees and expenses of its own witnesses and legal counsel.
7.9 INTERVOICE. InterVoice is a party to this Agreement solely for the purpose
of acknowledging and agreeing to the provisions and obligations of Section 1.4,
and the representations and warranties set forth in Sections 2.4 and 2.5.
7.10 COUNTERPARTS. This Agreement may be executed by the parties hereto in one
or more counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same agreement.
-21-
22
IN WITNESS WHEREOF, Purchaser, Seller and the Principal Shareholder have
executed this Agreement as of the date first above written.
INTERVOICE ACQUISITION SUBSIDIARY, INC.
By: /s/ XXXXXXX X. XXXXXX
------------------------------------
Xxxxxxx X. Xxxxxx, President
"Purchaser"
INTEGRATED TELEPHONY
PRODUCTS, INC.
By: /s/ XXXXX XXXXXXXX
------------------------------------
Xxxxx Xxxxxxxx, President
"Seller"
/s/ XXXXX XXXXXXXX
---------------------------------------
Xxxxx Xxxxxxxx
"Principal Shareholder"
IN WITNESS WHEREOF, InterVoice has executed this Agreement as of the date first
above written solely for the purposes set forth in Section 7.9.
INTERVOICE, INC.
By: /s/ XXXXXXX X. XXXXXX
------------------------------------
Xxxxxxx X. Xxxxxx, President
"InterVoice"
-22-
23
(Exhibits and Schedules to Assets Purchase Agreement and First
Amendment available upon request.)
24
FIRST AMENDMENT TO ASSETS PURCHASE AGREEMENT
This First Amendment to Assets Purchase Agreement, executed as of
February 26, 1998, amends that certain Assets Purchase Agreement executed as of
December 16, 1997 (the "Agreement"), by and among InterVoice Acquisition
Subsidiary, Inc., a Nevada corporation ("Purchaser"), that is a wholly owned
subsidiary of InterVoice, Inc., a Texas corporation ("InterVoice"); Integrated
Telephony Products, Inc., a Nevada Corporation ("Seller"); and Xxxxx Xxxxxxxx
(the "Principal Shareholder"). All terms used in this Amendment but not defined
in this Amendment, and which are defined in the Agreement, shall have the
meanings ascribed to such terms in the Agreement.
1. SALE AND PURCHASE. The first three sentences of Section 1.1 of the
Agreement (entitled "Sale and Purchase") are amended in their entirety to read
as follows: "At the closing at Purchaser's offices in Dallas, Texas at 9:30
a.m., local time, on February 26, 1998 or at such other place, time and date as
Purchaser, Seller and the Principal Shareholder may otherwise mutually agree
(the "Closing"), and subject to the terms of this Agreement, Purchaser will
purchase from Seller, and Seller will sell to Purchaser, all of the Purchased
Assets (as defined in Section 1.2 hereof) in consideration of (i) Purchaser's
payment to Seller of an aggregate of cash consideration of $4,612,500.00 (the
"Cash Consideration"), (ii) services pursuant to and in accordance with the
Service Agreement (as defined in Section 1.5), and (iii) the Common Stock (as
defined in Section 1.4). The Cash Consideration will be reduced by the Initial
Payment (as defined in Section 1.3 hereof). Upon execution of this Agreement,
Purchaser will prepay $500,000 of the Cash Consideration (the "Prepayment"). At
Closing, subject to satisfaction of the closing conditions set forth in Section
4.2 (except to the extent any such conditions are waived by Purchaser in
accordance with Section 4.2), Purchaser will:(x) pay $687,500 of the Cash
Consideration to Seller by wire transfer in immediately available funds (based
on wire instructions provided by Seller); (y) pay $1,225,000 of the Cash
Consideration by wire transfer in immediately available funds to World Access
Communications Corp. ("World Access") pursuant to and in accordance with that
certain Settlement Agreement and Mutual Release effective as of February 20,
1998 (the "Settlement Agreement") among Seller, Lifshitz, InterVoice, Xxxx
Xxxxxxxxx and World Access; and (z) deposit the remaining $1.2 million of the
Cash Consideration, together with the Common Stock, into escrow in accordance
with the provisions of Section 5.3."
2. ESCROW AGREEMENT. Section 5.3 of the Agreement (entitled "Escrow
Agreement") is amended in its entirety to read as follows: "In order to secure
the obligations of Seller and the Principal Shareholder under this Agreement,
Purchaser shall deposit $1.2 million of the Cash Consideration and the Common
Stock (collectively, the "Escrowed Funds") into escrow for a maximum of one (1)
year from the Closing date (subject to the last two sentences of this Section
5.3) pursuant to the terms of an escrow agreement (the "Escrow Agreement"),
which will be executed as a Closing condition to this Agreement. If and when
Seller presents Purchaser with evidence reasonably satisfactory to Purchaser at
any time that all Unassumed Liabilities for sales taxes and use taxes to any
taxing authority in any jurisdiction, together with all taxes discussed in
Section 7.2 of this Agreement, have been paid, $200,000 of the Cash
Consideration will be released from the escrow. If and when Seller presents
Purchaser with evidence reasonably satisfactory to Purchaser at any time within
one year of the Closing date, that two of the three lawsuits (excluding the two
settled lawsuits with World Access) set forth on Schedule 3.14 have been fully
terminated, and that all claims that have been made or could have been made in
connection with such proceedings have been dismissed with prejudice by a court
of competent jurisdiction (and any settlement fully paid) or fully adjudicated
and any final judgment against Seller satisfied, the Common Stock will be
released from the escrow. Notwithstanding any other provision of this Section
5.3, $1 million of the Cash Consideration will remain Escrowed Funds and will
not be
Page 1 of 4 pages
25
released from the escrow after the first annual anniversary of the Closing,
until if and when Seller has presented Purchaser with evidence reasonably
satisfactory to Purchaser that: (i) all three lawsuits (excluding the two
settled lawsuits with World Access) set forth on Schedule 3.14 have been
fully terminated, and that all claims that have been made or could have been
made in connection with such proceedings have been dismissed with prejudice by
a court of competent jurisdiction (and any settlement fully paid) or fully
adjudicated and any final judgment against Seller satisfied; and (ii) any and
all liens in favor of Athena International, LLC ("Athena") and/or its
successors and/or assigns pursuant to, or evidenced by, a settlement with
Athena (the "Athena Settlement") have been fully and finally released and
terminated, and appropriated filings have been made evidencing such releases
and terminations. Notwithstanding any other provision of this section 5.3,
$200,000 of the Cash Consideration will remain Escrowed Funds and will not be
released from the escrow after the first annual anniversary of the Closing
until if and when Seller has presented Purchaser with evidence reasonably
satisfactory to Purchaser that all Unassumed Liabilities for sales taxes and
use taxes to any taxing authority in any jurisdiction, together with all taxes
discussed in Section 7.2 of this Agreement, have been paid."
3. SCHEDULE 3.11(b), LITIGATION STATUS AND UNAUDITED BALANCE SHEETS. Schedule
3.11(b) to the Agreement is attached to this Amendment and incorporated by this
reference into the Agreement. The Unaudited Balance Sheet is attached to this
Amendment. The second sentence of Section 3.10 of the Agreement (entitled
"Financial Statements") is amended in its entirety to read as follows: "The
Unaudited Balance Sheet (i) represents actual bona fide transaction, (ii) has
been prepared from the books and records of Seller in conformity with generally
accepted accounting principles consistently applied and (iii) accurately,
completely, and fairly presents in all material respects the financial position
of the business of Seller as of the date of thereof, except that the asset
category entitled "Accounts Receivable" is overstated by the sum of $60,500."
Solely for the purpose of calculating the Financial Ratio pursuant to Section
3.10 of the Agreement, the Prepayment will not be considered a liability of
Seller.
4. TAX ALLOCATIONS. Section 7.1 of the Agreement (entitled "Tax
Allocations") is amended in its entirety to read as follows: "Purchaser and
Seller will allocate the value of the Cash Consideration, the Common Stock and
the Service Agreement among the various Purchased Assets for purposes of Form
8594 and any other filings with the IRS in accordance with a tax allocation
schedule to be mutually agreed to between Seller and Purchaser within thirty
(30) days after the Closing Date."
5. PURCHASE OF FIXTURES, EQUIPMENT AND INVENTORY. (a) The assets to be
purchased by Purchaser from Seller include all fixtures, lamps, furniture,
exhibit booths, appliances, computers (both hardware and associated software),
printers, copier machines, testing tools, telephones and any related switching
apparatus, other tools and equipment, file cabinets, customer files and
inventory, used in the business of Seller as of February 3, 1998, including
without limitation the items described on Exhibit 5.0 attached hereto but
excluding the items specifically described thereon as excluded (collectively,
the "Tangible Assets"). The term "Purchased Assets" is amended by this
Amendment to mean the Software, the other Intellectual Property, the Premises
Lease Agreements and the Tangible Assets. All representations and covenants by
Seller in the Agreement applicable to the Purchased Assets, apply to the
Tangible Assets. Seller represents that it does not require any consents of any
kind, including without limitation any consents in connection with the Athena
Settlement, to convey the Tangible Assets to Purchaser pursuant to this
Agreement. Between the date of execution of this Amendment and the date of
Closing, Seller will (1) not sell or otherwise dispose of any Tangible Assets
except from its inventory and (2) only sell from its inventory in the normal
course of business and at Seller's normal standard prices. Seller will also
notify Purchaser in advance and in writing of any sale from its inventory of
items with a collective sales price of more than $5,000,000, setting forth the
price and
Page 2 of 4 pages
26
circumstances of such sale. Seller represents that as of the date of Closing
the Tangible Assets are all located in the offices covered by the Premises
Lease Agreements, except as otherwise disclosed on Exhibit 5.0 to this
Amendment. The Tangible Assets will automatically be delivered to Purchaser at
the locations set forth in this Amendment as of the date of Closing, without
any further action of any kind.
(b) The last Sentence of Section 3.6 of the Agreement (entitled "Title to, and
Condition of, the Purchased Assets") is amended in its entirety to read as
follows: "Upon Seller's transfer of the Purchased Assets to Purchaser pursuant
to this Agreement, Purchaser will have good and marketable title to all the
Purchased Assets free and clear of any Encumbrances, except as set forth on
Schedule 3.6 and as set forth in the Premises Lease Agreements."
6. CLOSING CONDITIONS. In the last line of Section 4.2(e) change "the
Purchased Assets" to "any of the Purchased Assets, other than the Tangible
Assets". Add the following additional closing condition, as Section 4.2(l):
"SETTLEMENT AGREEMENT AND DELIVERY OF TANGIBLE ASSETS. World Access shall have
made all deliveries to InterVoice, Inc. required pursuant to Section 2(a) of
the Settlement Agreement prior to the date of Closing. Seller shall provide
Purchaser with reasonable evidence that all Tangible Assets are in the
locations specified in this Agreement as of the date of Closing."
7. PRE-CLOSING SALES. Seller represents and warrants to Purchaser that,
pursuant to Section 7.5(b) of the Agreement, no Pre-Closing Sales have
occurred; and no new product warranty obligations have been incurred by Seller
since the date of execution of the Agreement.
8. SCHEDULES. Schedules 1.5, 3.6, 3.7, 3.11(a), 3.11(b), 3.12 and 3.14 to
the Agreement, are hereby amended by the attached First Amendments to Schedules
1.5, 3.6, 3.7, 3.11(a), 3.11(b), 3.12 and 3.14, and all of such First
Amendments to Schedules are hereby incorporated into this Amendment.
9. ACKNOWLEDGMENTS. Any and all ownership interests of any kind in any
assets, including without limitation any interests in any and all of the
Purchased Assets, conveyed to Seller by World Access pursuant to the Settlement
Agreement, are automatically conveyed by Seller to Purchaser pursuant to the
Agreement as of the date of Closing, without any further action of any kind. The
initial Payment and the Prepayment were paid to Seller prior to the date of this
Amendment. No Seller Indemnity shall be required to be made by Seller pursuant
to Article V of the Agreement with respect to any Purchaser Claims arising out
of or relating to the subject matter of the agreement dated September 30, 1997
between World Access and Seller and/or the transactions, arrangements or
understandings referred to therein (including without limitation prior
transactions directly or indirectly involving Vendor Capital Corporation and
sales and/or licenses to World Access prior to the September 30, 1997
agreement), and/or the lawsuits, correspondence and discussions referred to in
the Settlement Agreement, including without limitation any Purchaser Claims
resulting from the breach by Seller of the representations and warranties set
forth in Article III of the Agreement resulting from the existence of such
transactions, arrangements or understandings. The preceding sentence shall not
be construed as a release of liability for, or as a limit to the Seller
Indemnity for, Seller's representations and obligations pursuant to or under the
Settlement Agreement.
10. RATIFICATION. The Agreement, as amended by this Amendment, is hereby
ratified and approved in all respects.
11. COUNTERPARTS. This Amendment may be executed by the parties hereto in one
or more counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same amendment.
Page 3 of 4 pages
27
12. ASSISTANCE IN LITIGATION. The Purchaser and/or InterVoice shall, upon
reasonable notice, make available such information (excluding any Software
source code) to the Seller and/or Principal Shareholder (subject to any
reasonable protective measures to safeguard Purchaser's confidential and/or
proprietary information) as may reasonably be required by the Seller and/or
Principal Shareholder in connection with any litigation in which the Seller
and/or Principal Shareholder is, or may become, a party. Purchaser will also
make available at Purchaser's offices in Dallas, Texas for reasonable use and/or
inspection, by Seller and/or Principal Shareholder (or their designated
representatives) in such offices, Software (including source code for the
Software), computers and/or other equipment for operation with the Software, in
connection with any litigation referred to in the preceding sentence. The
reasonable use and inspection of Software, computers and equipment discussed in
the preceding sentence is expressly limited to no more than forty hours in the
aggregate, for all such lawsuits, and shall be conducted at hours mutually
agreed to by Purchaser and Seller and/or Principal Shareholder, which hours may
be limited by Purchaser to weekends and hours outside of Purchaser's and
InterVoice's normal hours of operation. The Seller and/or Principal Shareholder
shall reimburse the Purchaser and/or InterVoice for all reasonable out-of-pocket
expenses incurred by Purchaser and/or InterVoice in rendering such assistance.
13. INTELLECTUAL PROPERTY. The second-to-last sentence of Section 3.12(b) of
the Agreement (entitled "Intellectual Property") is amended in its entirety to
read as follows: "Seller has only provided copies of the Software to its
customers in connection with the sale of voice and/or call automation systems
and only in executable code (not source code) and only pursuant to
non-exclusive licenses which reserve all ownership rights to Seller except as
set forth in Schedule 3.12.
IN WITNESS WHEREOF, Purchaser, Seller, and Principal Shareholder have executed
this Amendment as of the date first above written.
INTERVOICE ACQUISITION SUBSIDIARY, INC.
By: /s/ XXXXXX X. XXXXXXX
------------------------------------
Xxxxxx X. Xxxxxxx, Chairman of the Board
and Chief Executive Officer
"Purchaser"
INTEGRATED TELEPHONY PRODUCTS, INC.
By: /s/ XXXXX XXXXXXXX
------------------------------------
Xxxxx Xxxxxxxx, President
"Seller"
/s/ XXXXX XXXXXXXX
---------------------------------------
Xxxxx Xxxxxxxx
"Principal Shareholder"
Page 4 of 4 pages
28
SECOND AMENDMENT
TO ASSETS PURCHASE AGREEMENT
This Second Amendment to Assets Purchase Agreement, executed as of May 22,
1998 (the "Amendment"), amends that certain Assets Purchase Agreement executed
as of December 16, 1997 (as heretofore amended, the "Agreement"), by and among
InterVoice Acquisition Subsidiary, Inc., a Nevada corporation ("Purchaser"),
that is a wholly owned subsidiary of InterVoice, Inc., a Texas corporation: ABC
Telecom, Inc. formerly known as Integrated Telephony Products, Inc., a Nevada
corporation ("Seller"); and Xxxxx Xxxxxxxx (the "Principal Shareholder"). All
terms used in this Amendment, but not defined in this Amendment and which are
defined in the Agreement, shall have the meanings ascribed to such terms in the
Agreement. The Agreement, as modified by this Amendment, is hereby ratified and
confirmed in all respects.
1. Tax Matters. Seller, Principal Shareholder, and Purchaser acknowledge and
agree that if any taxing authority in any jurisdiction asserts that any
taxes, interest, penalties and/or other amounts relating thereto are owed
by Seller (collectively, an "Alleged Tax Delinquency"), and as a result of
such assertion, voids or sets aside or attempts to void or set aside the
acquisition of any of the Purchased Assets by Purchaser, and /or imposes or
threatens to impose and Encumbrance on any of the Purchased Assets (any of
such events or actions, a "Payment Trigger"), Seller and Principal
Shareholder hereby authorize Purchaser to pay any or all such Alleged Tax
Delinquencies asserted by any and all applicable taxing authorities for and
on behalf of Seller. Within ten (10) business days of receipt by Seller of
reasonable evidence of the occurrence of a Payment Trigger and payment of
an Alleged Tax Delinquency by Purchaser in response thereto, Seller shall
reimburse Purchaser the full amount of such Alleged Tax Delinquency.
Notwithstanding any provision of the Agreement, Seller, Principal
Shareholder and Purchaser acknowledge and agree that any claim by Purchaser
for reimbursement of a payment for and Alleged Tax Delinquency made in
response to the occurrence of a Payment Trigger is a "Purchaser Claim" for
purposes of the Agreement, and is, therefore, subject to the Seller
Indemnity, provided, however, any and all such Purchaser Claims will not be
subject to Section 5.4 of the Agreement. Accordingly, in all instances, if
reimbursement of an Alleged Tax Delinquency is due and payable to Purchaser
as provided herein, Seller will have to reimburse Purchaser the full amount
of a payment of an Alleged Tax Delinquency without regard to the aggregate
amount of all Purchaser Claims since the date of Closing. The provisions
of this paragraph shall not be construed in any way to obligate Purchaser
to pay any taxes for or on behalf of Seller. Seller agrees to promptly
notify Purchaser in writing of any Payment Trigger and/or any Alleged Tax
Delinquency asserted by any taxing authority, and to promptly provide
Purchaser with all correspondence, documents and other evidence of any
such Payment Trigger and/or Alleged Tax Delinquency in the possession of
Seller or Principal Shareholder. Seller and Principal Shareholder
represent and warrant to Purchaser that, as of the date of execution of
this Amendment, they have no knowledge of any Payment Trigger and/or any
Alleged Tax Delinquency asserted by any taxing authority. Purchaser
represents and warrants to Seller and the Principal Shareholder that
neither it nor anyone acting on its behalf shall initiate any contact with
any taxing authority in any jurisdiction with respect to any tax matters
relating to Seller unless such contact is made in response to an event or
action which can reasonably be construed as a Payment Trigger.
Page 1 of 3
29
2. Escrow Agreement. Within one business day of the execution and delivery of
this Amendment by both parties, Purchaser will instruct the Escrow Agent
to release from the Escrowed Funds $200,000 of Cash Consideration as
contemplated by the second sentence of Section 5.3 of the Agreement (which
sentence is hereby deleted by virtue of this Amendment) concerning payment
of taxes. In all instances where receipt by Purchaser of reasonable
evidence of any fact or event is a condition to the release of any Escrowed
Funds as contemplated by Section 5.3 of the Agreement, Purchaser shall
instruct the Escrow Agent to release such Escrowed Funds within fifteen
(15) business days of Purchaser's receipt of such evidence, or pursue the
dispute resolution procedure set forth in Section 7.8, if Purchaser has
reasonable grounds for believing that Seller has not provided reasonable
evidence. Purchaser acknowledges and agrees that the condition to the
release from the Escrowed Funds of $200,000 of the Cash Consideration as
contemplated by both the second sentence and the last sentence of Section
5.3 of the Agreement (which sentences are hereby deleted by virtue of this
Amendment) concerning payment of taxes has been satisfied in full.
3. Escrow Agreement. The second sentence and last sentence of Section 5.3 to
the Agreement are deleted in their entirety. In the first sentence of
Section 5.3 change "(subject to the last two sentences of this Section
5.3)" to "(subject to the provisions of this Section 5.3)". At the end of
the second sentence after "the Common Stock will be released from escrow"
add "even if there are any pending Disputed Matters which have been
submitted by Purchaser to Selling Parties prior to such date". Add the
following provision at the end of Section 5.3 of the Agreement:
"On the date (the "Scheduled Release Date") which is the last to occur
of the date Seller has presented Purchaser with evidence reasonably
satisfactory to Purchaser that the conditions set forth in clauses (i)
and (ii) in the immediately preceding sentence have been satisfied, or
the date of the first annual anniversary of the Closing, the Cash
Consideration remaining in escrow shall be released from escrow unless
prior to such Scheduled Release Date Purchaser has delivered to
Selling Parties written notice of a Disputed Matter in accordance with
the provisions of Section 7.8 of this Agreement. If such a written
notice of a Disputed Matter is delivered to Selling Parties in
accordance with Section 7.8 of this Agreement prior to the Scheduled
Release Date, the entire amount of Cash Consideration remaining in
escrow will not be released from escrow after the Scheduled Release
Date until if and when the Disputed Matter is either waived in writing
by Purchaser at its discretion, or finally, and completely resolved in
accordance with Section 7.8 by arbitration decision, and any award
entered by the arbitrators has been fully satisfied. The parties
acknowledge and agree that if any amount of the Cash Consideration
remains in escrow after the Scheduled Release Date as a result of any
Disputed Matter(s) submitted by Purchaser, the amount of such Cash
Consideration in escrow shall be reduced to an amount which is equal
to the Estimated Monetary Value of any Award(s) (as defined below) and
all Cash Consideration in excess of the Estimated Monetary Value of
any Award(s) will be released from escrow. Any claim by the Selling
Parties that the amount of Cash Consideration in escrow should be
reduced in accordance with the preceding sentence which is disputed by
Purchaser, will be treated as a Disputed Matter and resolved in
accordance with the provisions of Section 7.8 of
Page 2 of 3
30
this Agreement. For purposes of this Section 5.3, "Estimated Monetary
Value of any Award(s)" means the reasonable estimated monetary value
of any award(s) Purchaser would receive if Purchaser received
arbitration award(s) in its favor with respect to (all) the Disputed
Matter(s) submitted by Purchaser and pending as of the Scheduled
Release Date, less any and all amounts of such estimated awards
Selling Parties would not be obligated to pay Purchaser, due to the
limitations set forth in Section 5.4 of this Agreement, even if
Purchaser received arbitration decision(s) in its favor with respect
to (all) the Disputed Matter(s)."
4. Counterparts. This Agreement may be executed by the parties in one or more
counterparts, each of which shall be deemed an original, and all of which
shall constitute one and the same Agreement.
IN WITNESS WHEREOF, Purchaser, Seller, and Principal Shareholder have
executed this Amendment as of the date first above written.
INTERVOICE ACQUISITION
SUBSIDIARY, INC.
By: /s/ XXX-XXX X. XXXXXX
------------------------------------------
Xxx-Xxx X. Xxxxxx, Chief Financial Officer
"Purchaser"
ABC TELECOM, INC.
By: /s/ XXXXX XXXXXXXX
------------------------------------------
Xxxxx Xxxxxxxx, President
"Seller"
/s/ XXXXX XXXXXXXX
--------------------------------------------
Xxxxx Xxxxxxxx
"Principal Shareholder"
Page 3 of 3
