AGREEMENT WITH INCOMNET
DATED MARCH 31, 1998
AGREEMENT WITH INCOMNET
TABLE OF CONTENTS
1. Definitions
2. Representations and Warranties of Incomnet
(a) Organization of Incomnet
(b) Authorization
(c) Noncontravention
(d) Investment
(e) Seller Shares
3. Representations and Warranties of the Buyer
(a) Organization of the Buyer
(b) Authorization
(c) Noncontravention
4. Post-Closing Covenants
(a) General
(b) Litigation Support
(c) Transition
(d) Confidentiality
(e) Covenant Not to Compete
5. Remedies for Breaches of This Agreement and the Asset Purchase Agreement
(a) Survival of Representations and Warranties
(b) Indemnification Provisions for Benefit of the Buyer
(c) Indemnification Provisions for Benefit of Incomnet
(d) Matters Involving Third Parties
(e) Determination of Adverse Consequences
(f) Other Indemnification Provisions
(g) Indemnification Limitations and Thresholds
(h) Conditions to Incomnet's Obligations
6. Termination
7. Miscellaneous
(a) Exclusivity
(b) Press Releases and Public Announcements
(c) No Third Party Beneficiaries
(d) Entire Agreement
(e) Succession and Assignment
(f) Counterparts
(g) Headings
(h) Notices
(i) Governing Law
(j) Amendments and Waivers
(k) Severability
(l) Expenses
(m) Construction
(n) Submission to Jurisdiction
AGREEMENT WITH INCOMNET
Agreement dated as of March 31, 1998 between NTC Acquisition, Inc., a
Minnesota corporation (the "Buyer"), and Incomnet, Inc., a California
corporation ("Incomnet") and the sole shareholder of National Telephone &
Communications, Inc., a Delaware corporation (the "Seller"). The Buyer and
Incomnet are referred to collectively herein as the "Parties."
The Buyer and the Seller are entering into an Asset Purchase Agreement
concurrently herewith (the "Asset Purchase Agreement"). Certain terms used
herein without definition are used herein as defined in the Asset Purchase
Agreement.
The Asset Purchase Agreement contemplates a transaction in which the Buyer
will purchase the Acquired Assets (and accept responsibility for the Assumed
Liabilities) of the Seller in return for cash and the Buyer Shares.
The Buyer and the Seller make certain representations, warranties, and
covenants in the Asset Purchase Agreement which will survive the Closing for
purposes of potential indemnification. Incomnet, however, may cause the Seller
to liquidate and dissolve after the Closing. The Buyer and Incomnet therefore
wish to provide post-Closing indemnification against breaches of these
representations, warranties, and covenants and to make certain other covenants
among themselves to the extent that Incomnet causes such a liquidation and
dissolution.
Now, therefore, in consideration of the premises and the mutual promises
herein made, the Buyer and Incomnet agree as follows.
1. DEFINITIONS.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.
"ASSET PURCHASE AGREEMENT" has the meaning set forth in the preface
above.
"CONFIDENTIAL INFORMATION" means any information concerning the
business and affairs of the Seller that is not already generally available to
the public.
"INDEMNIFIED PARTY" has the meaning set forth in Section 5(d) below.
"INDEMNIFYING PARTY" has the meaning set forth in Section 5(d) below.
"PARTY" has the meaning set forth in the preface above.
"SELLER SHARE" means any share of the Common Stock, par value $.001
per share, of the Seller.
"THIRD PARTY CLAIM" has the meaning set forth in Section 5(d) below.
2. REPRESENTATIONS AND WARRANTIES OF INCOMNET. Incomnet represents and
warrants to the Buyer that the statements contained in this Section 2 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 2).
(a) ORGANIZATION OF INCOMNET. Incomnet is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation.
(b) AUTHORIZATION. Incomnet has full corporate power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
Subject to approval of the Asset Purchase Agreement and this Agreement by the
shareholders of Incomnet, this Agreement constitutes the valid and legally
binding obligation of Incomnet, enforceable in accordance with its terms and
conditions, except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and subject to general principles of equity
(regardless of whether such enforcement is considered in a proceeding at law or
at equity).
(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement by Incomnet, nor the performance by Incomnet of its obligations
hereunder, will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, stipulation, ruling, charge, or other
restriction of any government, governmental agency, or court to which Incomnet
is subject (or any provision of its charter or bylaws) or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which Incomnet is a party or by which it is bound or to
which any of its assets is subject, except where such violation, conflict,
breach, default, acceleration, creation of right, or failure to provide notice
would not reasonably be expected to have a material adverse effect on Incomnet's
obligations hereunder.
(d) INVESTMENT. Incomnet (i) understands that the Buyer Shares have
not been, and will not be, registered under the Securities Act, or under any
state securities laws, and are being offered and sold in reliance upon federal
and state exemptions for transactions not involving any public offering, (ii) is
acquiring the Buyer Shares solely for
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its own account for investment purposes, and not with a view to the distribution
thereof in violation of the Securities Act, (iii) is a sophisticated investor
with knowledge and experience in business and financial matters, (iv) has
received certain information concerning the Buyer and has had the opportunity to
obtain additional information as desired in order to evaluate the merits and the
risks inherent in holding the Buyer Shares, (v) is able to bear the economic
risk and lack of liquidity inherent in holding the Buyer Shares, and (vi) is an
Accredited Investor.
(e) SELLER SHARES. Incomnet holds of record all of the issued and
outstanding Seller Shares (subject to the exercise of any outstanding options to
acquire Seller Shares).
3. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and
warrants to Incomnet that the statements contained in this Section 3 are correct
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 3).
(a) ORGANIZATION OF INCOMNET. The Buyer is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation.
(b) AUTHORIZATION. The Buyer has full corporate power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of the
Buyer, enforceable in accordance with its terms and conditions, except to the
extent that enforceability may be limited by applicable bankruptcy, insolvency
or similar laws affecting the enforcement of creditors' rights generally and
subject to general principles of equity (regardless of whether such enforcement
is considered in a proceeding at law or at equity).
(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement by the Buyer, nor the performance by the Buyer of its obligations
hereunder, will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, stipulation, ruling, charge, or other
restriction of any government, governmental agency, or court to which the Buyer
is subject (or any provision of its charter or bylaws) or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which the Buyer is a party or by which it is bound or to
which any of its assets is subject.
4. POST-CLOSING COVENANTS. The Parties agree as follows with respect to
the period following the Closing; PROVIDED, HOWEVER, that the covenants set
forth in clauses (a) and (b) are expressly conditioned upon, and are of no force
and effect except in the case of, the liquidation and dissolution of the Seller.
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(a) GENERAL. In case at any time after the Closing any further
action is necessary to carry out the purposes of the Asset Purchase Agreement,
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request, all at the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor under
Section 5 below). Incomnet acknowledges and agrees that from and after the
Closing the Buyer will be entitled to possession of all documents, books,
records (including Tax records), agreements, and financial data of any sort
relating to the Seller; PROVIDED, HOWEVER, that the Buyer shall provide Incomnet
with reasonable access to any such documents, books, records, agreements and
financial data (and Incomnet may keep copies of any such information) for the
purposes of enabling Incomnet to satisfy any of the Seller's obligations with
respect to any of the Seller's obligations or Liabilities that do not constitute
Assumed Liabilities or for other proper business purposes (e.g., for
determination of Taxes), subject in all events to Incomnet's obligations
pursuant to Section 4(d) hereof. If, at any time, the Buyer proposes to dispose
of any of such original documents, the Buyer shall first provide Incomnet with
60 days written notice of such proposal and shall offer to deliver the original
documents it wishes to dispose of to Incomnet at the expense of Incomnet. At
the end of such 60 day period, the Buyer may, without liability to Incomnet,
dispose of any such original documents which Incomnet has not informed the Buyer
in writing that it desires to recover.
(b) LITIGATION SUPPORT. In the event and for so long as any Party is
actively contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand, the other Party will
cooperate with the contesting or defending Party and its counsel in the contest
or defense, make available its personnel, and provide such testimony and access
to its books and records as shall be necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to indemnification
therefor under Section 5 below).
(c) TRANSITION. Incomnet will use its reasonable best efforts to not
take any action that is designed or intended to have the effect of materially
discouraging any lessor, licensor, customer, supplier, or other business
associate of the Seller from maintaining the same or similar business
relationships with the Buyer after the Closing as it maintained with the Seller
prior to the Closing.
(d) CONFIDENTIALITY. Incomnet will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential Information
except in connection with this Agreement or for the purposes of enabling Seller
and/or Incomnet to satisfy any of Seller's obligations with respect to any of
Seller's obligations or Liabilities that do not constitute Assumed Liabilities
or for other proper business purposes (e.g., for determination of Taxes),
subject in all events to Incomnet's obligations pursuant to Section 4(d) hereof.
In the event that Incomnet is requested or required (by oral question or request
for information or documents in any legal proceeding, interrogatory, subpoena,
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civil investigative demand, or similar process) to disclose any Confidential
Information, Incomnet will notify the Buyer promptly of the request or
requirement so that the Buyer may seek an appropriate protective order or waive
compliance with the provisions of this Section 4(c). If, in the absence of a
protective order or the receipt of a waiver hereunder, Incomnet is compelled to
disclose any Confidential Information to any tribunal or else stand liable for
contempt, Incomnet may disclose the Confidential Information to the tribunal;
PROVIDED, HOWEVER, that Incomnet shall use its best efforts to obtain, at the
request and expense of the Buyer, an order or other assurance that confidential
treatment will be accorded to such portion of the Confidential Information
required to be disclosed as the Buyer shall designate.
(e) COVENANT NOT TO COMPETE. For a period of five years from and
after the Closing Date, Incomnet will not engage directly or indirectly in any
business that the Seller conducts as of the Closing Date in any geographic area
in which the Seller conduct that business as of the Closing Date; PROVIDED,
HOWEVER, that no owner of less than 5% of the outstanding stock of any publicly
traded corporation shall be deemed to engage solely by reason thereof in any of
its businesses. If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 4(d) is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
5. REMEDIES FOR BREACHES OF THIS AGREEMENT AND THE ASSET PURCHASE
AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All of the representations and warranties of the Seller and the Buyer
contained in the Asset Purchase Agreement and of the Buyer and Incomnet
contained in this Agreement shall survive the Closing and continue in full force
and effect for a period of eighteen months thereafter; PROVIDED, HOWEVER, that
(a) the representations and warranties of the Seller set forth in Sections 3(b)
and (e) and of the Buyer set forth in Sections 4(b) and (f) of the Asset
Purchase Agreement, and (b) the representations and warranties of Incomnet set
forth in Section 2(b) and of the Buyer set forth in Section 3(b) of this
Agreement shall survive the Closing and continue in full force and effect
forever thereafter (subject to any applicable statutes of limitations).
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(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.
(i) In the event the Seller breaches (or in the event any
third party alleges facts that, if true, would mean the Seller has
breached) any of its representations, warranties, and covenants contained
in the Asset Purchase Agreement, and, if there is an applicable survival
period pursuant to Section 5(a) above, provided that the Buyer makes a
written claim for indemnification (specifying in reasonable detail the
Basis for such indemnification claim) against Incomnet pursuant to Section
7(h) below within such survival period, then Incomnet agrees to indemnify
the Buyer from and against the entirety of any Adverse Consequences (but
subject to Section 5(g)) the Buyer may suffer through and after the date of
the claim for indemnification (including any Adverse Consequences the Buyer
may suffer after the end of any applicable survival period) resulting from,
arising out of, relating to, or caused by the breach (or the alleged
breach).
(ii) In the event Incomnet breaches (or in the event any third
party alleges facts that, if true, would mean Incomnet has breached) any of
its representations, warranties, and covenants contained in this Agreement,
and, if there is an applicable survival period pursuant to Section 5(a)
above, provided that the Buyer makes a written claim for indemnification
(specifying in reasonable detail the Basis for such indemnification claim)
against Incomnet pursuant to Section 7(h) below within such survival
period, then Incomnet agrees to indemnify the Buyer from and against the
entirety of any Adverse Consequences (but subject to Section 5(g)) the
Buyer may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Buyer may suffer
after the end of any applicable survival period) resulting from, arising
out of, relating to, or caused by the breach (or the alleged breach).
(iii) Incomnet agrees to indemnify the Buyer from and against
the entirety of any Adverse Consequences the Buyer may suffer resulting
from, arising out of, relating to, or caused by any Liability of the Seller
which is not an Assumed Liability (excluding any Liability of the Seller
that becomes a Liability of the Buyer under any bulk transfer law of any
jurisdiction).
(iv) Pursuant to Section 2(c)(iii) of the Asset Purchase
Agreement, the Buyer shall deliver to the Escrow Agent at Closing a number
of Buyer Shares representing four percent (4%) of the Buyer Shares on a
Fully-Diluted Basis (the "Escrowed Shares"). For purposes of this
Agreement, the term "Escrow Claim" means any and all claims against the
Escrowed Shares, individually or in the aggregate, made by Buyer under the
terms and conditions of the Escrow Agreement. Neither the assertion of nor
the failure to assert an Escrow Claim will relieve Incomnet of any of its
indemnification obligations under the terms and subject to the conditions
of this Agreement, except to the extent such Escrow Claim is satisfied in
whole or in part thereby.
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(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF INCOMNET.
(i) In the event the Buyer breaches (or in the event any
third party alleges facts that, if true, would mean the Buyer has breached)
any of its representations, warranties, and covenants contained in the
Asset Purchase Agreement and in this Agreement, and, if there is an
applicable survival period pursuant to Section 5(a) above, provided that
Incomnet makes a written claim for indemnification (specifying in
reasonable detail the Basis for such indemnification claim) against the
Buyer pursuant to Section 7(h) below within such survival period, then the
Buyer agrees to indemnify Incomnet from and against the entirety of any
Adverse Consequences (but subject to Section 5(g)) Incomnet may suffer
through and after the date of the claim for indemnification (including any
Adverse Consequences Incomnet may suffer (whether through Seller or
otherwise) after the end of any applicable survival period) resulting from,
arising out of, relating to, or caused by the breach (or the alleged
breach).
(ii) The Buyer agrees to indemnify Incomnet from and against
the entirety of any Adverse Consequences (whether through Seller or
otherwise) Incomnet may suffer resulting from, arising out of, relating to,
or caused by any Assumed Liability (including any Liability of the Seller
that becomes a Liability of the Buyer under any bulk transfer law of any
jurisdiction).
(d) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Party (the
"INDEMNIFIED PARTY") with respect to any matter (a "THIRD PARTY CLAIM")
which may give rise to a claim for indemnification against any other Party
(the "INDEMNIFYING PARTY") under this Section 5, then the Indemnified Party
shall promptly notify each Indemnifying Party thereof in writing; PROVIDED,
HOWEVER, that no delay on the part of the Indemnified Party in notifying
any Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party notifies the Indemnified Party in writing within 15 days
after the Indemnified Party has given notice of the Third Party Claim that
the Indemnifying Party will indemnify the Indemnified Party from and
against the entirety of any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, or caused by the Third
Party Claim, (B) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the
Third Party Claim and fulfill its indemnification obligations
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hereunder, (C) the Third Party Claim involves only money damages and does
not seek an injunction or other equitable relief that affects generally the
business of the Indemnified Party, (D) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the reasonable,
good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice materially adverse to the continuing
business interests of the Indemnified Party, and (E) the Indemnifying Party
conducts the defense of the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 5(d)(ii) above,
(A) the Indemnified Party may retain separate co-counsel at its sole cost
and expense and participate in the defense of the Third Party Claim, (B)
the Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (not to be withheld
unreasonably), and (C) the Indemnifying Party will not consent to the entry
of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnified Party (not
to be withheld unreasonably).
(iv) In the event any of the conditions in Section 5(d)(ii)
above is or becomes unsatisfied, however, (A) the Indemnified Party may
defend against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not consult
with, but must still obtain consent from, any Indemnifying Party in
connection therewith), (B) the Indemnifying Parties will reimburse the
Indemnified Party promptly and periodically (after receipt of reasonable
supporting documentation) for the costs of defending against the Third
Party Claim (including reasonable attorneys' fees and expenses), and (C)
the Indemnifying Parties will remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting from, arising out
of, relating to, or caused by the Third Party Claim to the extent provided
in this Section 5 (but subject to Section 5(g)).
(e) DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall not
take into account the time cost of money in determining Adverse Consequences for
purposes of this Section 5.
(f) OTHER INDEMNIFICATION PROVISIONS. The remedies provided in this
Section 5 shall be the Parties' sole and exclusive remedy for monetary damages
(whether at law or in equity). None of the Buyer's, the Seller's or Incomnet's
officers, directors, employees, agents, stockholders, consultants, investment
bankers, legal advisers or representatives shall have any liability or
obligation to the Seller or the Buyer, as applicable, in connection with the
transactions contemplated by the Asset Purchase Agreement or this Agreement or
in respect of any statement, representation, warranty or assurance of any
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kind made by the Buyer, the Seller, Incomnet, or their representatives or any
other person. Incomnet hereby agrees that neither it nor any of its officers,
employees, directors or agents will make any claim for indemnification against
the Buyer by reason of the fact that he or it was a director, officer, employee,
or agent of the Seller or Incomnet, as applicable, or was serving at the request
of any such entity as a partner, trustee, director, officer, employee, or agent
of another entity (whether such claim is for judgments, damages, penalties,
fines, costs, amounts paid in settlement, losses, expenses, or otherwise and
whether such claim is pursuant to any statute, charter document, bylaw,
agreement, or otherwise) with respect to any action, suit, proceeding,
complaint, claim, or demand brought by the Buyer against Incomnet (whether such
action, suit, proceeding, complaint, claim, or demand is pursuant to this
Agreement, applicable law, or otherwise). If an Indemnifying Party makes any
payment under this Section 5 in respect of any Adverse Consequences, the
Indemnifying Party shall be subrogated, to the extent of such payment, to the
rights of the Indemnified Party against any insurer or third party with respect
to such Adverse Consequences; PROVIDED, HOWEVER, that the Indemnifying Party
shall not have any rights of subrogation with respect to the other Party hereto
or any of its Affiliates or any of its or its Affiliates' officers, directors,
agents or employees.
(g) INDEMNIFICATION LIMITATIONS AND THRESHOLDS. No claim for
indemnification will be made by either Party hereunder unless the aggregate
amount of all Adverse Consequences incurred by such Party otherwise indemnified
against hereunder exceeds $100,000 and only to the extent of any such Adverse
Consequences in excess of $100,000. No claim for indemnification of Adverse
Consequences (whether in an action for indemnification or otherwise) may be made
by either Party hereunder to the extent the aggregate Adverse Consequences
claimed (including any Adverse Consequences previously recovered, but excluding
Adverse Consequences under Sections 5(b)(iii) or 5(c)(ii)) by such party exceeds
$2,500,000. Any claims made by the Buyer against the Seller pursuant to the
Seller's indemnification obligations set forth in the Asset Purchase Agreement,
as well as any payments made by the Seller in satisfaction of such obligations,
shall be taken into account in determining whether the applicable thresholds and
limitations set forth in this Section 5(h) have been satisfied. Notwithstanding
that both Incomnet and Seller may have an obligation to indemnify Buyer pursuant
to the terms of this Agreement and the Asset Purchase Agreement (i) Buyer shall
not be entitled to recover from Seller or Incomnet, as applicable, for any
Adverse Consequences which have been satisfied by the other pursuant to its
indemnification obligations, and (ii) Seller and Incomnet shall not be required
to engage more than one law firm to defend Buyer and may allocate
responsibilities for such defense between them, or to either of them, as they
deem appropriate.
(h) CONDITIONS TO INCOMNET'S OBLIGATIONS. Incomnet's indemnification
obligations under Section 5(b)(i) and 5(b)(iii) are expressly conditioned upon,
and are of no force and effect except in the case of, (i) the Seller's
liquidation and dissolution, (ii) the Seller's dividend or distribution of a
material portion of its assets to its shareholder(s) or (iii) the Seller's other
transfer without value of a material portion of its assets.
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6. TERMINATION. This Agreement shall terminate if and only if the Asset
Purchase Agreement is terminated prior to the Closing in accordance with and
pursuant to the terms thereof.
7. MISCELLANEOUS.
(a) EXCLUSIVITY. Incomnet will not (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of any capital stock or other voting securities, or any
substantial portion of the assets, of the Seller (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii) participate in
any discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing, except, in the case of
clause (ii), where the failure of the Board of Directors of Incomnet to so act
in connection with any such proposal or offer would constitute a breach of the
Board of Directors' fiduciary obligations to the holders of the capital stock of
Incomnet (it being agreed and understood for this purpose that the failure to
respond to any such offer or proposal which the Board of Directors of Incomnet
determines to be superior, from a financial point of view, in comparison to the
transactions contemplated by the Asset Purchase Agreement may be deemed to be a
breach of such fiduciary duty). Incomnet will notify the Buyer immediately if
he or it becomes aware that any Person has made any proposal, offer, inquiry, or
contact with respect to any of the foregoing.
(b) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue
any press release or make any public announcement relating to the subject matter
of the Asset Purchase Agreement without prior written approval of the other
Party; PROVIDED, HOWEVER, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its best efforts to advise the other Parties prior to
making the disclosure).
(c) NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(d) ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
(e) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the Buyer and
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Incomnet; PROVIDED, HOWEVER, that the Buyer may (i) assign any or all of its
rights and interests hereunder to one or more of its wholly-owned Subsidiaries
and (ii) designate one or more of its wholly-owned Subsidiaries to perform its
obligations hereunder (in any or all of which cases the Buyer nonetheless shall
remain liable and responsible for the performance of all of its obligations
hereunder); and PROVIDED FURTHER that Incomnet may assign its rights and
obligations hereunder in connection with any merger, combination, sale of
substantially all of its assets (after giving effect to the transactions
contemplated by the Asset Purchase Agreement), or other similar business
combination transaction.
(f) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
five business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
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IF TO INCOMNET:
Incomnet, Inc.
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chairman
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ #▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
COPIES TO:
Irell & ▇▇▇▇▇▇▇ LLP
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
And
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Wilshire Palisades Building
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
IF TO THE BUYER:
NTC Acquisition, Inc.
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, President
▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
COPY TO:
▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.A.
Attn: ▇.▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is
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received by the intended recipient. Any Party may change the address to which
notices, requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
(i) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of California without giving
effect to any choice or conflict of law provision or rule (whether of the State
of California or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of California.
(j) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and Incomnet. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(k) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) EXPENSES. Each of the Parties will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby (except as otherwise provided
herein).
(m) CONSTRUCTION. The Parties have participated jointing in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
(n) SUBMISSION TO JURISDICTION. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement
may be brought against any of the parties (i) in the competent courts in the
State of Minnesota if such enforcement is sought against Buyer, or (ii) in the
competent courts in the State of California if such enforcement is sought
against Incomnet; and the parties hereto consent to the exclusive jurisdiction
of such courts in respect of such action or proceeding.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
NTC ACQUISITION, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Title: President
------------------------
INCOMNET, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Title: President
------------------------
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