Exhibit 2.0 Purchase and Sale Agreement between Zkid Network Company and USURF
Communications, Inc. dated May 26, 2004
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
Page
Article I Definitions..........................................................1
Article II Purchase And Sale Of Assets.........................................2
2.1 Acquisition of Assets........................................2
---------------------
2.2 Liabilities Not Assumed......................................2
-----------------------
2.3 Liabilities Assumed..........................................3
-------------------
2.4 Closing......................................................3
-------
2.5 Closing Documents............................................3
-----------------
2.6 Further Assurances...........................................4
------------------
Article III Representations And Warranties Of Seller...........................4
3.1 Organization and Authority...................................4
--------------------------
3.2 Title to and Transfer of Assets..............................4
-------------------------------
3.3 Approvals and Consents.......................................4
----------------------
3.4 Conflicting Agreements.......................................4
----------------------
3.5 No Violation of Any Instrument...............................4
------------------------------
3.6 Corporate Authorization......................................4
-----------------------
3.7 Intellectual Property........................................5
---------------------
3.8 Taxes........................................................5
-----
3.9 Litigation and Government Claims.............................5
--------------------------------
3.10 Financial Information........................................5
---------------------
3.11 Insurance Notices............................................6
-----------------
3.12 Compliance with Laws.........................................6
--------------------
3.13 Employee Benefit Plans.......................................6
----------------------
3.14 Labor Relations..............................................6
---------------
3.15 Relationships with Affiliates and Others.....................6
----------------------------------------
3.16 Agreements & Relationships...................................6
--------------------------
3.17 Accuracy of Information Furnished............................7
---------------------------------
3.18 Investment Intent............................................7
-----------------
3.19 Review of PURCHASER Information..............................7
-------------------------------
3.20 Restrictive Legend...........................................7
------------------
Article IV representations and warranties of Purchaser.........................7
4.1 Organization and Qualifications; Subsidiaries................7
---------------------------------------------
4.2 Capitalization of PURCHASER and its Subsidiaries.............8
------------------------------------------------
4.3 Authority Relative to this Agreement.........................8
------------------------------------
4.4 Financial Statements.........................................8
--------------------
4.5 SEC Reports..................................................9
-----------
4.6 Consents and Approvals: No Violations........................9
-------------------------------------
4.7 No Default...................................................9
----------
4.8 No Undisclosed Liabilities, Absence of Changes...............9
----------------------------------------------
4.9 Litigation..................................................10
----------
4.10 Compliance with Applicable Law..............................10
------------------------------
4.11 Employee Benefit Plans; Labor Matters.......................10
-------------------------------------
4.12 Environmental Laws and Regulations..........................10
----------------------------------
4.13 Taxes.......................................................11
-----
4.14 Intellectual Property; Software.............................12
-------------------------------
4.15 Certain Business Practices..................................12
--------------------------
4.16 Vote Required...............................................12
-------------
4.17 Brokers.....................................................12
-------
Article V Covenants...........................................................13
5.1 Conduct of Business Pending Closing.........................13
-----------------------------------
5.2 Use of Business for Seller's Customers......................12
--------------------------------------
5.3 Access and Information......................................12
----------------------
5.4 Public Announcements........................................13
--------------------
5.5 Payment of Obligations Not Assumed..........................13
----------------------------------
Article VI Indemnification And Certain Remedies...............................13
6.1 Indemnification by Seller...................................13
-------------------------
6.2 Indemnification by Purchaser................................14
----------------------------
6.3 Specific Performance........................................14
--------------------
6.4 Survival of Representations and Warranties..................14
------------------------------------------
6.5 Nonexclusive Remedies.......................................14
---------------------
Article VII Termination.......................................................14
7.1 Termination for Failure to Close............................14
--------------------------------
7.2 Termination by Mutual Consent...............................14
-----------------------------
7.3 Termination by Seller.......................................14
---------------------
7.4 Termination by Purchaser or PURCHASER.......................15
-------------------------------------
7.5 Effect of Termination.......................................15
---------------------
Article VIII Dispute Resolution...............................................15
8.1 Agreement to Use Procedure..................................15
--------------------------
8.2 Initiation of Procedure.....................................15
-----------------------
8.3 Mediation...................................................15
---------
8.4 Arbitration.................................................15
-----------
8.5 Confidentiality.............................................15
---------------
Article IX Miscellaneous......................................................16
9.1 Expenses....................................................16
--------
9.2 Reliance....................................................16
--------
9.3 Notice......................................................16
------
9.4 Successors and Assigns......................................16
----------------------
9.5 Governing Law...............................................16
-------------
9.6 Amendment...................................................16
---------
9.7 Severability................................................17
------------
9.8 Confidentiality.............................................17
---------------
9.9 Headings....................................................17
--------
9.10 Entire Agreement...................................17
----------------
9.11 Counterparts.......................................17
------------
ii
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into by and between ZKID Network,
Inc., a Nevada corporation ("ZKID" or "Purchaser"), USURF Communications, Inc.,
a Colorado corporation ( "Seller") - Purchaser and Seller are collectively
referred to as the "Parties" - and is effective April 15, 2004 (the "Effective
Date").
Recitals
WHEREAS, Purchaser desires to purchase the software-related assets of
Seller used or useful in or relating to Seller's child-safety software business
including all products and Internet properties listed under its website
▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and all hard assets related to the operation of such
site and software business (hereafter referred to as the "Business") in
accordance with this Agreement; and
WHEREAS, Seller desires to sell such Assets to Purchaser in exchange for
consideration consisting of shares of restricted ZKID common stock;
THEREFORE, in consideration of the foregoing and of the mutual covenants
contained in this Agreement, and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
Article I
Definitions
The following terms used in this Agreement shall have the following
meanings, unless otherwise expressly provided herein or unless the context
requires otherwise:
"Agreement" shall mean this Asset Purchase Agreement and all exhibits
(hereby incorporated by reference) or amendments hereto.
"Customer" or "Customers" shall mean subscribers to Seller's products.
"Knowledge" or "best of the knowledge" shall mean, with respect to (as a
qualification of) a Party's representations and warranties herein, the
following: (i) with respect to an individual, such individual's present
consciousness and recollection of the facts set forth in or underlying each such
representation or warranty, and his investigation of matters for the purpose of
the transactions contemplated by this Agreement, in each case as a reasonable
prudent person; and (ii) with respect to an entity, its management's actual and
present consciousness and recollection of the facts underlying each such
representation and warranty, assuming the performance by each member of such
entity's management of all managerial obligations in the business and operations
of the entity and such member's investigation of matters for the purpose of the
transactions contemplated by this Agreement, in each case as a reasonably
prudent person.
"Securities Act" shall mean the Securities Act of 1933, as amended,
including the rules and regulations of the Securities and Exchange Commission
promulgated thereunder, as such shall then be in effect.
"ZKID Stock" shall mean the shares of $.0001 par value common stock issued
by ZKID in connection with and pursuant to this Agreement.
1
Article II
PURCHASE AND SALE OF ASSETS
2.1 Acquisition of Assets.
---------------------
(a) Assets. Subject to the terms and conditions stated in this
Agreement, Seller hereby sells, and Purchaser hereby acquires, all of the assets
identified on the attached Exhibit A. The items sold and purchased pursuant to
this Agreement are collectively referred to as the "Assets." In addition to the
assets reflected on Exhibit A, the Assets shall include:
(i) all of Seller's copyrights, trademarks, trade names or
other trade designations used in or for the Business, along
with the associated goodwill;
(ii) contracts and agreements necessary to operate the business;
(iii) all rights in any data processing systems and equipment
used in the Business, including operations manuals,
computer hardware, software, databases and related
documentation;
(iv) all of Seller's data and know-how of any kind relating to
the Business;
(v) all of Seller's lists of customers of the Business;
(vi) all other intangible properties and assets of the Business;
(vii) all accrued, asserted or unasserted claims of Seller
against third parties relating to the Business;
(viii) all prepaid expenses and deposits of or for the Business;
and
(ix) all books and records of any kind and form related to any
of the foregoing.
(b) Purchase Price. As full consideration for the Assets and for
the non-competition agreement of Seller set forth in this Agreement (the
"Non-competition Agreement"), Purchaser shall, at the Closing (as defined below)
issue to Seller 4,000,000 shares of restricted ZKID common stock (the "Shares"
or the "Purchase Price"). The purchase price assumes a market price of $0.15 per
share for ZKID common stock, or a total market value of $600,000. In the event
the trailing 10-day weighted average stock price falls below $0.20 prior to the
Closing Date, Purchaser shall issue additional shares of restricted ZKID common
stock to the Seller such that the aggregate market value of ZKID common stock
maintains a $ 600,000 purchase price at closing.
The Shares shall be fully paid and nonassessable, yet shall be
unregistered and restricted pursuant to SEC Rule 144. When such shares are
eligible for registration pursuant to SEC Rule 144 (twelve months following
their issuance - the "Registration Date"), Purchaser shall guarantee the market
value of such shares to be worth at least the same $600,000 as follows: If the
10-day weighted average closing prior to the Registration Date is below $0.15
per share, Purchaser shall issue to Seller additional shares of ZKID common
stock (the "Guarantee Shares") such that the market value of the Guarantee
Shares AND the original Shares issued herein equals $600,000. The Purchaser
shall execute the Registration Rights Agreement in the form attached hereto as
Exhibit B with respect to the Guarantee Shares (if any) at the Closing.
2.2 Liabilities Not Assumed. Purchaser does not assume, and shall not be
responsible for, the payment, performance, or discharge of any liabilities or
obligations of Seller, whether now existing or hereafter arising. Without
limiting the intent and effect of the preceding sentence, Seller, and not
2
Purchaser, shall be responsible for (i) any and all liabilities,
responsibilities, expenses and obligations relating to the Business (or any part
thereof) incurred, accruing, or arising before the Effective Date, even if not
asserted until on or after the Effective Date.
2.3 Liabilities Assumed. Purchaser shall pay, perform and discharge, and
Seller shall not be responsible for, all of the liabilities related to the
conduct of the Business by Purchaser on and after the Effective Date, including
without limitation:
(a) All federal and state tax liabilities associated with the
income of Purchaser as the result of Purchaser's operation of the Business;
(b) All trade payables of the Business; and
(c) Seller's data center lease with Fortrust, Inc.
2.4 Closing. The closing of the transaction contemplated by this Agreement
(the "Closing") shall take place at 1 p.m. MDT on Monday, May 31, 2004, or at
such other time and date as shall be fixed by agreement of the Parties (the
"Closing Date").
2.5 Closing Documents and Conditions to Close. Before the Closing, each
Party shall prepare, and at the Closing, the Parties shall execute and deliver,
each document and condition required by this Agreement to be so executed and
delivered.
(a) Seller's Obligations. At the Closing, Seller shall deliver or
satisfy:
(i) a ▇▇▇▇ of Sale in a form acceptable to Purchaser,
dated and effective as of the Effective Date;
(ii) all passwords, instructions and codes necessary to
access all servers and workstations containing source
code of Seller's products and its customer database;
(iii) acknowledgements of assignment pertaining to all
distribution or reseller agreements, duly executed by
each provider, and in a form acceptable to Purchaser;
(iv) all other required consents, approvals, or releases
from third parties and/or shareholders or directors;
(b) Purchaser's Obligations. At the Closing, Purchaser shall
deliver:
(i) The greater of 3,000,000 shares or the number of
shares representing $600,000 of ZKID restricted
(pursuant to SEC Rule 144) common stock issued in the
name of the Seller pursuant to Section 2.1 (b) above;
(ii) a copy of the resolution adopted by the Board of
Directors of Purchaser authorizing and approving the
transaction contemplated by this Agreement;
(iii) the Registration Rights Agreement in the form of
Exhibit B executed by Purchaser;
(iv) the opinion of ZKID's legal counsel that the Shares,
when issued in accordance with the terms of this
Agreement, are validly issued, fully paid and
non-assessable.
3
2.6 Further Assurances. After the Closing, the Parties shall execute and
deliver such additional documents and take such additional actions as may
reasonably be deemed necessary or advisable by any Party to consummate the
transaction contemplated by this Agreement and to vest more fully in Purchaser
the ownership of the Business and Assets transferred and conveyed pursuant to
this Agreement, or intended to be so transferred.
Article III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser, as of the Effective Date, the
following:
3.1 Organization and Authority. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada.
Seller has all requisite corporate power and authority, governmental permits,
consents, authorizations, registrations, licenses and memberships (collectively,
"Permits") necessary to own its property, including the Assets, and to carry on
the Business in the places where such properties are owned or such Business is
conducted. Each of such Permits and Seller's rights with respect thereto is
valid, in full force and effect, and enforceable by Seller. Seller is in
compliance in all material respects with the terms of such Permits. None of such
Permits have been or, to the knowledge of Seller, are threatened to be revoked,
canceled, suspended or modified.
3.2 Title to and Transfer of Assets. On the Effective Date, Seller has
valid title to the Assets and owns the Assets free and clear of any
encumbrances.
3.3 Approvals and Consents. Seller represents and warrants that all
contracts included in the Assets are assignable (or if not assignable, that the
consents necessary to assign such contracts will have been obtained as of the
Closing) and will remain in full force and effect after the Closing, that Seller
is not in breach of any of such contracts and that the consummation of the
transaction contemplated by this Agreement will not constitute a breach or an
event of default under any of such contracts. No authorization, consent, permit,
license or approval of, or declaration, registration of filing with, any person
or entity (including any governmental authority), other than those already
obtained in writing, is required as a condition to the execution, delivery or
performance by Seller of this Agreement or any other document executed by Seller
in connection with this Agreement or the consummation of the transaction
contemplated hereby.
3.4 Conflicting Agreements. Neither the execution nor the performance of
this Agreement or any other document executed by Seller in connection with the
transaction contemplated by this Agreement will result in any breach, violation
of, or conflict with, or constitute a default under any contract or agreement to
which the Seller is a party, or result in the termination or acceleration or
maturity of, or result in the imposition of, any lien, claim, obligation, or
encumbrance upon any of the Assets.
3.5 No Violation of Any Instrument. Seller is not in violation of or in
default under, nor has any event occurred that, with the lapse of time or the
giving of notice or both, would constitute a violation of or default under, or
permit the termination or the acceleration of maturity of, or result in the
imposition of any lien, claim, or encumbrance upon any property or asset of
Seller pursuant to, its Articles of Incorporation or Bylaws, or any note, bond
indenture, mortgage, deed of trust, evidence of indebtedness, loan or lease
agreement, judgment, order, injunction or decree to which it is a party, by
which it is bound or to which any of the Assets or the Business are subject.
3.6 Corporate Authorization. Seller has the corporate power and authority
to execute and deliver this Agreement and all other documents executed in
connection therewith and to perform the obligations imposed by this Agreement
and all such other documents. All corporate action on the part of Seller and its
4
officers and directors necessary for the authorization, execution and delivery
of this agreement and all other documents executed in connection therewith have
been taken. The Seller will use its best efforts to promptly obtain the approval
of its shareholders of this Agreement. Following such approval, this Agreement
shall constitute a legal, valid and binding obligation of Seller.
3.7 Intellectual Property. Exhibit C attached hereto accurately identifies
all of Seller's copyrights, trademarks, service marks, trade dress, trade names,
trade designations, technology, processes and technical data (collectively,
"Intellectual Property"), if any, currently owned in whole or in part by Seller
relating to the Business and all agreements relating to the Intellectual
Property that Seller is licensed or authorized to use by other persons relating
the Business. Seller owns or is licensed to use the Intellectual Property
relating to the Business without infringing on or violating the rights of any
other person, and no consent of any other person is required for the ownership
or use thereof by Purchaser upon consummation of the transaction contemplated by
this Agreement. Except as set forth on Exhibit C, no claim has been asserted by
any person or entity to the ownership or the right to use any of the
Intellectual Property or challenging or questioning the validity or
effectiveness of any of the Intellectual Property.
3.8 Taxes. All monies required to be withheld by Seller from employees or
collected from customers for income taxes, social security, Medicare and
unemployment insurance taxes, sales, excise and use taxes, and all such taxes to
be paid by Seller to governmental authorities have been collected or withheld
and paid to the respective governmental authorities, or such obligations have
been accrued, reserved, or otherwise recorded in Seller's accounting records.
All federal, state, county and local income, gross receipts, excise, property,
franchise, licenses, sales, use, withholding and other tax and information
returns and declarations required to have been filed before the Effective Date
by Seller have been duly and timely filed, and each such return correctly
reflects the tax liability and all other information required to be reported
therein. Seller is not aware of any deficiency with respect to any tax period or
any liability with respect to taxes or penalties and interest thereon, or
related charges and fees, whether or not assessed. There are no pending or
threatened claims, assessments, proposals to assess deficiencies or audits with
respect to any taxes owed or allegedly owed by Seller, nor, to the knowledge of
Seller, is there any basis for any such action. The tax returns and reports of
Seller have never been audited by the Internal Revenue Service or any other
taxing authority.
3.9 Litigation and Government Claims. There is no suit, claim, action or
litigation, or governmental, administrative, arbitral or other similar
proceeding, investigation or inquiry, pending or, to the knowledge of Seller,
threatened against or affecting Seller or to which the Business or the Assets
are subject. None of such pending matters will, severally or in the aggregate,
have an adverse effect on the Business, results of operations, Assets, or
condition, financial or otherwise, of Seller, the Business or the Assets. To the
best of Seller's knowledge, there are no such proceedings threatened or
contemplated or any unasserted claims (whether or not the potential claimant may
be aware of the claim) of any nature that might be asserted against Seller
regarding the Business or the Assets. None of such threatened or contemplated
proceedings or unasserted claims would, severally or in the aggregate, have an
adverse effect on the business, results of operations, assets or condition,
financial or otherwise, of Seller, the Business, or the Assets.
3.10 Financial Information.
(a) In contemplation of this transaction, Seller has delivered to
Purchaser certain financial information with respect to the Business (the
"Financial Statements"), including, but not necessarily limited to the
following:
(i) Seller's Unaudited Statement of Operations for the
Business for the four months ended March 31, 2004.
5
The Financial Statements have been prepared from the books and records of Seller
and Seller's consultant (W&O Enterprises, LLC who helped operate the Business)
maintained on a basis consistent with preceding months and throughout the
periods involved.
(b) Seller's financial books and records relating in any way to
the Business have been kept accurately in the ordinary course of business. The
transactions recorded therein represent bona fide transactions and the revenues,
expenses, assets and liabilities of Seller have been properly recorded in such
books in all material respects.
3.11 Insurance Notices. Seller has not received notice from any insurer of
the intention (whether or not subject to conditions) of such insurer to
discontinue any insurance coverage relating to the Business or any of the Assets
because of the operation or condition of any of the Assets or any of the real
property leased or subleased by Seller.
3.12 Compliance with Laws. As conducted by Seller, the Business is in
compliance with all applicable laws and regulations. Seller is not a party to or
subject to any judgment, order or decree entered in any suit or proceeding
brought by any governmental authority or regulatory agency or any other person
or entity enjoining or restricting Seller with respect to any business practice,
the acquisition of any property, the use of any of the Assets, or the conduct of
the Business.
3.13 Employee Benefit Plans. No condition exists that would justify the
attachment of any liens on, or any other recourse to, the Assets or the Business
as a result of the funding or administration of any employee benefit plan of
Seller.
3.14 Labor Relations. With respect to any employees of the Business:
(a) Seller is in compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment, and
wages and hours;
(b) There is no collective bargaining agreement or other labor
union contract applicable to any employee of Seller, and no such agreement or
contract has been requested;
(c) Seller is not aware of any union organization activities or
proceedings involving any employees of Seller;
(d) There is no unfair labor practice complaint against Seller
pending before the National Labor Relations Board or, to the best of the
knowledge of Seller, so threatened, and Seller is not engaged in any unfair
labor practice and is not aware or any problems with employees that could have
an adverse effect on the Business; and
(e) There is no strike, labor dispute, slowdown, stoppage, or
other material interference with or impairment by labor of the Business actually
pending, threatened or contemplated.
3.15 Relationships with Affiliates and Others. No director or officer of
Seller, nor any person who is related to such director or officer by blood or
marriage, serves as a director, officer, partner or equity owner of any
customer, vendor, supplier or service provider of the Business.
3.16 Agreements & Relationships. Set forth on Exhibit D is an accurate and
complete list of the material contracts and agreements related to the Seller's
business and Assets sold pursuant to this Agreement. Seller has not received any
notice from any such party to such contracts or agreements, or has any other
knowledge, that such party (i) has terminated or ceased, or has significantly
6
reduced the volume or amount of, its business with the Seller or has any intent
to do any of the foregoing after the Closing, whether because of the Closing or
otherwise, or (ii) will refuse to do business with Purchaser after the Closing
on substantially the same terms and conditions as it did business with Seller
before the Closing.
3.17 Accuracy of Information Furnished. No representation or warranty by
Seller in or pursuant to this Agreement contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements herein, in light of the circumstances under which they were made, not
false or misleading. To the best of the knowledge of Seller, Seller has
disclosed to Purchaser all facts known to it that are material to the Assets and
to the operations, financial condition or prospects of the Business.
3.18 Investment Intent. The shares acquired hereunder will be held by Seller
and will be distributed only pursuant an effective registration statement under
the Securities Act or to the shareholders of Seller in connection with the
liquidation of Seller.
3.19 Review of ZKID Information. Seller has received and reviewed ZKID's
Annual Report on Form 10-KSB for the year ended December 31, 2003, as filed with
the Securities and Exchange Commission ("SEC"), its Quarterly Reports on Form
10-QSB for the quarters ended March 31, June 30 and September, 2003, as filed
with the SEC, and its Current Reports on Form 8-K, as filed with the SEC
(collectively, the "SEC Reports"). Seller acknowledges that it has had an
opportunity to ask questions of, and to receive answers from, the officers of
ZKID concerning the SEC Reports. Seller will provide copies of the SEC Reports
to its shareholders in connection with their approval of this Agreement.
3.20 Restrictive Legend. Seller consents to the placement of the following
legend, or a legend similar thereto, on the certificate or certificates
representing the Shares to be issued under this Agreement:
THESE SECURITIES HAVE BEEN ISSUED IN RELIANCE UPON THE
EXEMPTION FROM REGISTRATION AFFORDED BY SECTION 4(2) OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED
WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION
TO THE EFFECT THAT ANY SUCH PROPOSED TRANSFER IS IN ACCORDANCE
WITH ALL APPLICABLE LAWS, RULES AND REGULATIONS.
Seller understands that Purchaser will cause such legend to be removed
promptly upon registration of the Shares under the Securities Act.
Article IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller, as of the Effective Date, the
following:
4.1 Organization and Qualifications; Subsidiaries. Exhibit E identifies
each subsidiary of PURCHASER as of the date hereof and its respective state of
incorporation or organization, as the case may be. PURCHASER does not have any
interest in any other corporation, partnership, limited liability company,
business trust or other business entity. Each of PURCHASER and its subsidiaries
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite power
and authority to own, lease and operate its properties and to carry on its
businesses as now being conducted.
Each of PURCHASER and its subsidiaries is duly qualified or licensed and in
good standing to do business in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except in such jurisdictions where
the failure to be so duly qualified or licensed and in good standing would not
have a Material Adverse Effect on PURCHASER (as defined below). When used in
7
connection with PURCHASER or its subsidiaries, the term "Material Adverse Effect
on PURCHASER" means any change or effect (i) that is or is reasonably likely to
be materially adverse to the business, results of operations, condition
(financial or otherwise) or prospects of PURCHASER and its subsidiaries, taken
as whole, or (ii) that would impair the ability of PURCHASER to consummate the
transactions contemplated this Agreement in accordance with its terms.
4.2 Capitalization of PURCHASER and its Subsidiaries. The authorized
capital stock of PURCHASER consists of 500 million shares of common stock, of
which 140 million shares were issued and outstanding as of the date of this
Agreement, and 1,000 shares of Series A preferred stock, (representing 30
million votes and convertible into 5 million shares of common). All of the
outstanding shares have been validly issued and are fully paid, non-assessable
and free of preemptive rights. Except as disclosed in PURCHASER's SEC Reports,
as of the date hereof and as of the Closing, there are outstanding (i) no shares
of capital stock or other voting securities of PURCHASER, (ii) no securities of
PURCHASER or its subsidiaries convertible into or exchangeable for shares of
capital stock or voting securities of PURCHASER, (iii) no options or other
rights to acquire from PURCHASER or its subsidiaries and no obligations of
PURCHASER or its subsidiaries to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of PURCHASER and (iv) no equity equivalent interests or rights to
acquire equity equivalent interests in the ownership or earnings of PURCHASER or
its subsidiaries or other similar rights. As of the date hereof, there are no
outstanding obligations of PURCHASER or its subsidiaries to repurchase, redeem
or otherwise acquire any PURCHASER securities. There are no stockholder
agreements, voting trusts or other agreements or understandings to which
PURCHASER is a party or by which it is bound relating to the voting or
registration of any shares of capital stock of PURCHASER.
All of the outstanding capital stock of PURCHASER's subsidiaries is owned by
PURCHASER, directly or indirectly, free and clear of any Lien (as defined below)
or any other limitation or restriction (including any restriction on the right
to vote or sell the same except as may be provided as a matter of law). Except
as disclosed in PURCHASER's SEC Reports, there are (i) no securities of
PURCHASER or its subsidiaries convertible or exchangeable for, (ii) no options
or other rights to acquire from PURCHASER or its subsidiaries and (iii) no other
contract, understanding, arrangement or obligation (whether or not contingent)
providing for, the issuance or sale, directly or indirectly, of any capital
stock or other ownership interests in or any other securities of any subsidiary
of PURCHASER. There are no outstanding contractual obligations of PURCHASER or
its subsidiaries to repurchase, redeem or otherwise acquire any outstanding
shares of capital stock or other ownership interests in any subsidiary of
PURCHASER. For purposes of this Agreement, "Lien" means any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of a
particular asset.
4.3 Authority Relative to this Agreement. PURCHASER has all necessary
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been (i) duly and validly authorized by the Board of Directors of PURCHASER. No
other corporate proceedings on the part of PURCHASER are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by PURCHASER and
constitutes a valid, legal and binding agreement of PURCHASER, enforceable
against PURCHASER in accordance with its terms.
4.4 Financial Statements. The consolidated financial statements of
PURCHASER contained in the SEC Reports (collectively, the "PURCHASER Financial
Statements") fairly present, in conformity with generally accepted accounting
principles applied on a consistent basis (except as may be indicated in the
notes thereto), the consolidated financial position of PURCHASER and its
subsidiaries as of the dates thereof and their consolidated results of
operations for the periods then ended.
8
4.5 SEC Reports. PURCHASER acknowledges that Seller may deliver a copy of
the SEC Reports to its shareholders in connection with their evaluation and
approval of this Agreement and the transactions contemplated hereby. The SEC
Reports have been prepared in compliance with the disclosure requirements of
Form 10-K, Form 10-Q and Form 8-K, as the case may be, and at their respective
time of filing the SEC Reports did not contain an untrue statement of material
fact or omit to state a material fact necessary in order to make the statements
made not misleading. PURCHASER has filed all reports required of it under the
Securities Exchange Act of ▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇▇▇ ▇▇▇"). PURCHASER is not aware of
any event or circumstance that would prevent it from timely filing all future
reports required of it under the Exchange Act.
4.6 Consents and Approvals: No Violations. Except as may be required in
connection with the registration of the Shares under the Securities Act and
applicable state securities laws, no filing with or notice to and no permit,
authorization, consent or approval of any United States or foreign court or
tribunal, or administrative, governmental or regulatory body, agency or
authority (a "Governmental Entity") is necessary for the execution and delivery
by PURCHASER of this Agreement or the consummation by PURCHASER of the
transactions contemplated hereby, except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings or give
such notice would not have a Material Adverse Effect on PURCHASER. Neither the
execution, delivery and performance of this Agreement by PURCHASER nor the
consummation by PURCHASER of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
Articles of Incorporation or bylaws (or similar governing documents) of
PURCHASER or any of its subsidiaries, (ii) result in a violation or breach of or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration
or Lien) under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, leased license, contract, agreement or other instrument or
obligation to which PURCHASER or any of its subsidiaries is a party or by which
any of them or any of their respective properties or assets may be bound or
(iii) violate any order, writ, injunction, decree, law, statute, rule or
regulation applicable to PURCHASER or any of its subsidiaries or any of their
respective properties or assets except, in the case of (ii) or (iii), for
violations, breaches or defaults which would not have a Material Adverse Effect
on PURCHASER.
4.7 No Default. The SEC Reports identify each note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument which is
material to PURCHASER and its subsidiaries taken as a whole. Neither PURCHASER
nor its subsidiaries is in breach, default or violation (and no event has
occurred which with notice or the lapse of time or both would constitute a
breach, default or violation) of any term, condition or provision of (i) its
Articles of Incorporation or bylaws (or similar governing documents), (ii) any
note, bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which PURCHASER or any of its subsidiaries is now a
party or by which any of them or any of their respective properties or assets
may be bound or (iii) any order, writ, injunction, decree, law, statute, rule or
regulation applicable to PURCHASER or any of its subsidiaries or any of their
respective properties or assets except, in the case of (ii) or (iii), for
violations, breaches or defaults that would not individually or in the
aggregate, have a Material Adverse Effect on PURCHASER.
4.8 No Undisclosed Liabilities, Absence of Changes. Neither PURCHASER nor
its subsidiaries has any liabilities or obligations of any nature, whether or
not accrued, contingent or otherwise, that would be required by generally
accepted accounting principles to be reflected on a consolidated balance sheet
of PURCHASER, other than liabilities incurred in the ordinary course of business
since September 30, 2003, none of which, individually or in the aggregate, would
have a Material Adverse Effect on PURCHASER. Since December 31, 2003, there have
been no events changes or effects with respect to PURCHASER or its subsidiaries
having or which reasonably could be expected, individually or in the aggregate,
to have a Material Adverse Effect on PURCHASER.
9
4.9 Litigation. Except as disclosed in PURCHASER's SEC Reports, there is no
suit, claim, action, proceeding or investigation pending or, to the knowledge of
PURCHASER, threatened against PURCHASER or any of its subsidiaries or any of
their respective properties or assets which individually or in the aggregate
could reasonably be expected to have a Material Adverse Effect on PURCHASER or
could reasonably be expected to prevent or delay the consummation of the
transactions contemplated by this Agreement. Neither PURCHASER nor its
subsidiaries is subject to any outstanding order, writ, injunction or decree
which could reasonably be expected to have a Material Adverse Effect on
PURCHASER or could reasonably be expected to prevent or delay the consummation
of the transactions contemplated hereby.
4.10 Compliance with Applicable Law. PURCHASER and its subsidiaries hold all
permits, licenses, variances, exemptions, orders and approvals of all
governmental entities necessary for the lawful conduct of their respective
businesses (the "PURCHASER Permits") except for failures to hold such permits,
licenses, variances, exemptions, orders and approvals which would not have a
Material Adverse Effect on PURCHASER. PURCHASER and its subsidiaries are in
compliance with the terms of PURCHASER Permits except where the failure to so
comply would not have a Material Adverse Effect on PURCHASER. PURCHASER and its
subsidiaries are conducting their businesses in compliance with and are not in
violation of any law, ordinance or regulation of the United States or any
foreign country or any political subdivision thereof or of any Governmental
Entity. No investigation or review by any Governmental Entity with respect to
PURCHASER or its subsidiaries is pending or, to the knowledge of PURCHASER,
threatened nor, to the knowledge of PURCHASER, has any Governmental Entity
indicated an intention to conduct the same, other than such investigations or
reviews as would not, individually or in the aggregate, have a Material Adverse
Effect on PURCHASER.
4.11 Employee Benefit Plans; Labor Matters. With respect to employees of
PURCHASER and its subsidiaries:
(a) PURCHASER and its subsidiaries are in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment, and wages and hours;
(b) There is no collective bargaining agreement or other labor
union contract applicable to any such employee, and no such agreement or
contract has been requested;
(c) PURCHASER is not aware of any union organization activities or
proceedings involving any such employees;
(d) There is no unfair labor practice complaint against Seller
pending before the National Labor Relations Board or, to the best of the
knowledge of Seller, so threatened, and Seller is not engaged in any unfair
labor practice and is not aware or any problems with employees that could have
an adverse effect on the Business; and
(e) There is no strike, labor dispute, slowdown, stoppage, or
other material interference with or impairment by labor actually pending,
threatened or contemplated involving such employees.
4.12 Environmental Laws and Regulations. PURCHASER and its subsidiaries are
in material compliance with all applicable federal, state, local and foreign
laws and regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata) (collectively "Environmental Laws")
except for non-compliance that would not have a Material Adverse Effect on
PURCHASER, which compliance includes, but is not limited to, the possession by
PURCHASER and its subsidiaries of all material permits and other governmental
authorizations required under applicable Environmental Laws and compliance with
the terms and conditions thereof; (ii) neither PURCHASER nor its subsidiaries
has received written notice of or, to the knowledge of PURCHASER, is the subject
10
of any action, cause of action, claim, investigation, demand or notice by any
person or entity alleging liability under or non-compliance with any
Environmental Law (an "Environmental Claim") that could reasonably be expected
to have a Material Adverse Effect on PURCHASER; and (iii) to the knowledge of
PURCHASER, there are no circumstances that are reasonably likely to prevent or
interfere with such material compliance in the future.
There are no Environmental Claims which could reasonably be expected to have
a Material Adverse Effect on PURCHASER that are pending or, to the knowledge of
PURCHASER, threatened against PURCHASER or its subsidiaries or, to the knowledge
of PURCHASER, against any person or entity whose liability for any Environmental
Claim PURCHASER or any of its subsidiaries has or may have retained or assumed
either contractually or by operation of law.
4.13 Taxes.
(a) Definitions. For purposes of this Agreement:
(i) the terms "Tax" and "Taxes" mean (A) all federal,
state, local, foreign and other net income, gross
income, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, license, lease,
service, service use, withholding, payroll,
employment, excise, severance, stamp, occupation,
premium, property, windfall profits, customs, duties
or other taxes, fees, assessments or charges of any
kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts
with respect thereto, (B) any liability for payment
of amounts described in clause (A) whether as a
result of transferee liability, of being a member of
an affiliated, consolidated, combined or unitary
group for any period, or otherwise through operation
of law, and (C) any liability for the payment of
amounts described in clauses (A) or (B) as a result
of any tax sharing, tax indemnity or tax allocation
agreement or any other express or implied agreement
to indemnify any other person; and
(ii) the term "Tax Return" means any return, declaration,
report, statement, information statement and other
document required to be filed with respect to Taxes.
PURCHASER and its subsidiaries have accurately prepared and timely filed all
Tax Returns they are required to have filed. Such Tax Returns are accurate and
correct in all material respects and do not contain a disclosure statement under
Section 6662 of the Code (or any predecessor provision or comparable provision
of state, local or foreign law).
PURCHASER and its subsidiaries have paid or adequately provided for all Taxes
(whether or not shown on any Tax Return) they are required to have paid or to
pay.
No audit or material claim for assessment or collection of Taxes is presently
being conducted or asserted against PURCHASER or its subsidiaries and neither
PURCHASER nor any of its subsidiaries is a party to any pending audit, action,
proceeding, or investigation by any governmental taxing authority nor does
PURCHASER have knowledge of any such threatened audit, action, proceeding or
investigation.
Neither PURCHASER nor any of its subsidiaries is a party to any agreement,
contract, arrangement or plan that has resulted or would result, separately or
in the aggregate, in connection with this Agreement or any change of control of
PURCHASER or any of its subsidiaries, in the payment of any "excess parachute
payments" within the meaning of the Code.
11
4.14 Intellectual Property; Software. Each of PURCHASER and its subsidiaries
owns or possesses adequate licenses or other valid rights to use all existing
United States and foreign patents, trademarks, trade names, service marks,
copyrights, trade secrets and applications therefore which are used or relied
upon in their businesses (the "Company Intellectual Property Rights"), except
where the failure to own or possess valid rights to use such Company
Intellectual Property Rights would not have a Material Adverse Effect on
PURCHASER.
Except for any of the following which would not reasonably be expected to
have a Material Adverse Effect on PURCHASER, (i) the validity of PURCHASER
Intellectual Property Rights and the title thereto of PURCHASER or of any
subsidiary, as the case may be, is not being questioned in any litigation to
which PURCHASER or any subsidiary is a party, and (ii) the conduct of the
business of PURCHASER and its subsidiaries as now conducted does not, to the
knowledge of PURCHASER, infringe any valid patents, trademarks, trade names,
service marks, or copyrights of others. The consummation of the transactions
completed hereby will not result in the loss or impairment of any Company
Intellectual Property Rights.
4.15 Certain Business Practices. None of PURCHASER, any of its subsidiaries
or any directors, officers, agents or employees of PURCHASER or any of its
subsidiaries has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (iii)
made any other unlawful payment.
4.16 Vote Required. The shareholders of PURCHASER or its subsidiaries are
not required to approve this Agreement or the transactions contemplated hereby.
4.17 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of PURCHASER.
Article V
COVENANTS
5.1 Conduct of Business Pending Closing. Prior to the Closing, each Party
shall use all commercially reasonable efforts to (i) conduct its respective
business in the ordinary course consistent with past practice, (ii) preserve
intact its relationships with third parties, and (iii) keep available, to the
extent reasonably necessary, the services of its current officers and key
employees, subject to the terms of this Agreement.
5.2 Use of Business for Seller's Customers. Following the closing of this
Agreement, Purchaser shall allow Seller to distribute the software product to
its current voice and data customers (currently estimated to be 500 customers)
and to any additional customers of Purchaser obtained through acquisitions
closed by July 31, 2004 (estimated to be 12,000 additional customers).
5.3 Access and Information. From the date this Agreement is fully executed
through the Closing, the Parties shall afford each other and their financial
advisors, legal counsel, accountants, consultants, financing sources, and other
authorized representatives reasonable access, during normal business hours and
without material disruption to their business, to all of their books, documents,
records, properties, plants and personnel that relate to this transaction and,
during such period, shall furnish as promptly as practicable such additional
information as a Party reasonably may request in connection with the transaction
contemplated by this Agreement. No investigation by a Party pursuant to this
paragraph shall affect any representations or warranty made by in this Agreement
or the conditions to the obligations of the Parties to consummate the
transaction contemplated by this Agreement.
12
5.4 Public Announcements. Each Party agrees to not issue any press release
or respond to any press inquiry with respect to this Agreement or the
transaction contemplated herein without the prior approval of the other Parties
(which approval will not be unreasonably withheld), except as may be required by
applicable law or any requirement of any stock exchange on which the stock of
any Party is listed.
5.5 Payment of Obligations Not Assumed. All obligations of Seller not
specifically assumed by Purchaser in this Agreement, including all liability for
income taxes, sales taxes and other obligations accruing prior to the Effective
Date, shall be paid by Seller, and Purchaser shall have no responsibility
therefor.
Article VI
INDEMNIFICATION AND CERTAIN REMEDIES
6.1 Indemnification by Seller. Seller shall indemnify and hold Purchaser
and each of their officers, directors, affiliates, employees, agents and
shareholders, harmless from and against any and all losses, liabilities,
damages, costs and expenses (including reasonable attorneys fees) asserted
against or incurred by Purchaser or any of their officers, directors,
affiliates, employees, agents and shareholders, resulting from or arising out of
or in connection with:
(a) any misrepresentation or breach by Seller of any warranty,
agreement or covenant contained in this Agreement or any other document
executed, delivered or furnished by Seller in connection herewith;
(b) the failure to comply with any applicable bulk transfer laws
relating to the transfer of the Assets;
(c) income, franchise, sales, use an other taxes, including any
penalties and interest with respect thereto, of or relating to the Assets, the
Business or any other assets or operations of Seller conducted before the
Effective Date;
(d) sales, transfer and other taxes, including any penalties and
interest with respect thereto, resulting from the consummation of the
transaction contemplated by this Agreement;
(e) liabilities and obligations of the Business before the
Effective Date and other liabilities and obligations of Seller or the Business
not specifically assumed by Purchaser in this Agreement;
(f) any actual or threatened violation of or noncompliance with,
or remedial obligation arising under, any applicable federal, state, or local
laws, rules or regulations, common law or strict-liability provision, and any
judicial or administrative interpretations thereof (including any judicial or
administrative orders or judgments), relating to health, safety, industrial
hygiene, pollution or environmental matters arising from any event, condition,
circumstance, activity, practice, incident, action or plan existing or occurring
before the Effective Date relating in any way to the Assets or the Business
(including the ownership, operation or use of the Assets and the conduct of the
Business before the Effective Date); and
(g) any losses or costs of defending against any claims which may
be made against Purchaser by any person claiming violations of any local, state
or federal laws relating to employment, including wages, hours, concerted
activity, nondiscrimination, occupational health and safety and the payment and
withholding of taxes, where such claims arise out of circumstances occurring
before the Effective Date.
Any indemnification obligation imposed upon Seller prior to the Effective Date
pursuant to this Article, including any contemplated credit or offset, shall
constitute a reduction of the Purchase Price.
13
6.3 Indemnification by Purchaser. Purchaser shall indemnify and hold Seller
and each of its officers, directors, affiliates, employees, agents and
shareholders, harmless from and against any and all losses, liabilities,
damages, cost and expenses (including reasonable attorneys' fees) asserted
against or incurred by Seller, or any of its officers, directors, affiliates,
employees, agents and shareholders, resulting from or arising out of or in
connection with:
(a) any misrepresentation or breach by Purchaser of any warranty,
agreement or covenant contained in this Agreement or any other document
executed, delivered or furnished by Purchaser in connection herewith;
(b) the operation of the Business by Purchaser on and after the
Effective Date, other than liabilities not assumed by Purchaser herein;
(c) any liabilities or actions taken by the Children's Educational
Network, LLC ("CEN") associated with the License and Distribution Agreement
dated on or about March 4, 2004 between Seller and CEN - a copy of the License
and Distribution Agreement is attached hereto under Exhibit D; or
(d) any liabilities or obligations of Seller or the Business
specifically assumed by Purchaser in this Agreement.
6.4 Specific Performance. Each Party acknowledges that a refusal without
just cause by such Party to comply with the agreements made herein will cause
irreparable harm to the other Party or Parties for which there may be no
adequate remedy. In such circumstances, a Party or Parties not in default at the
time of such refusal shall be entitled, in addition to other remedies set forth
in this Agreement, to specific performance of this Agreement by the Party or
Parties that so refused to comply with or breached this Agreement.
6.5 Survival of Representations and Warranties. Each representation or
warranty made by any Party in this Agreement shall survive the Closing.
6.6 Nonexclusive Remedies. Notwithstanding anything to the contrary in this
Agreement, the rights and remedies provided in this Article shall not be
exclusive of any other rights or remedies afforded to any Party, whether by
contract, at law or in equity. The rights and remedies provided in this
Agreement are cumulative, and the exercise of any one right or remedy by any
Party shall not preclude or constitute a waiver of its right to exercise any or
all other rights or remedies to which it is entitled.
Article VII
TERMINATION
7.1 Termination for Failure to Close. This Agreement will automatically
terminate if the Closing does not occur (and the Agreement has not otherwise
been terminated pursuant to Sections 8.2, 8.3 or 8.4) on or before May 31, 2004,
regardless of the reason.
7.2 Termination by Mutual Consent. This Agreement may be terminated at any
time prior to the Closing by unanimous written agreement of the Parties.
7.3 Termination by Seller. This Agreement may be terminated by Seller, at
any time prior to the Closing, in the event of a material breach by either
Purchaser of any representation, warranty, covenant or condition contained in
this Agreement provided that such breach is not curable or, if curable, is not
cured within ten (10) business days after written notice of such breach is given
by Seller to Purchaser.
14
7.4 Termination by Purchaser. This Agreement may be terminated by either
Purchaser at any time prior to the Closing, for the following reasons:
(a) a material breach by Seller of any representation, warranty,
covenant or condition contained in this Agreement; provided that such breach is
not curable or, if curable, is not cured within ten (10) business days after
written notice of such breach is given by Purchaser to Seller; or
(b) a determination by, and in the sole discretion of Purchaser
that, based upon the due diligence investigation performed by Purchaser, the
transaction contemplated by this Agreement should not or cannot be consummated.
7.5 Effect of Termination. Upon termination of this Agreement pursuant to
this Article, the Party choosing to terminate the Agreement shall, as soon as
practical, provide written notice of the termination to the other Parties. Such
notice shall specify the reason(s) for, and the date of, the termination. On the
date of termination, this Agreement shall terminate and the transactions
contemplated hereby shall be abandoned without further action required of the
Parties. Upon termination, no Party shall bear any further liability or
obligation to the other Parties. Additionally, all filings, applications, and
other submissions made pursuant to this Agreement or in anticipation of the
transaction contemplated herein shall, to the extent practical, be withdrawn or
cancelled.
Article VIII
DISPUTE RESOLUTION
8.1 Agreement to Use Procedure. The Parties agree that any dispute between
them relating to or arising out of this Agreement (a "Dispute") will be resolved
using only the procedures specified in this Article (the "Procedure").
8.2 Initiation of Procedure. A Party who desires to initiate the Procedure
(the "Initiating Party") shall give written notice to the other Parties,
describing, in general terms, the nature of the Dispute and the Initiating
Party's proposal to resolve the Dispute. The Parties receiving such notice (the
"Responding Party," whether one or more) shall have five (5) business days to
respond (the "Response") to the Initiating Party's proposal. If, within ten (10)
business days of the Response, the Parties have been unable to resolve the
dispute, the Parties shall resolve the dispute pursuant to the following
provisions.
8.3 Mediation. If the Parties are unable to resolve the Dispute within ten
(10) business days of the Response, the Parties shall submit the dispute to
non-binding mediation. The Parties shall mutually agree to the selection of a
qualified, neutral mediator no later than fifteen (15) business days following
the Response. The Parties will use their best efforts to mediate the dispute
within sixty (60) days following the Response.
8.4 Arbitration. If within sixty (60) days after the Response the Parties
have been unable to resolve the Dispute through mediation, the Dispute shall be
resolved through binding arbitration in accordance with this paragraph. No later
than fifteen (15) days following the termination of mediation, the Parties shall
submit the Dispute to the Denver, Colorado office of the American Arbitration
Association ("AAA") for binding arbitration. Arbitration shall be conducted in
accordance with the then-existing rules for commercial arbitration established
by the AAA, to the extent that such rules do not conflict with this Agreement.
Any decision or award by the arbitrator(s) shall be binding upon the Parties.
Judgment upon an award may be entered in any court having jurisdiction. All
arbitration fees and expenses shall be shared equally by the disputing Parties,
unless the arbitrator determines that circumstances require otherwise.
8.5 Confidentiality. The entire arbitration process, including any
stenographic, video, or audio record, shall be kept confidential. All conduct,
statements, promises, offers, views, and opinions, whether oral or written, made
15
during the course of the arbitration by a Disputing Party, its agents,
employees, representatives, or other attendees and by the arbitrator shall
remain confidential and shall, where appropriate, be deemed privileged. Such
conduct, statements, promises, offers, views, and opinions shall not be
discoverable or admissible for any purpose, including impeachment, in any
litigation or other proceeding involving the parties.
Article IX
MISCELLANEOUS
9.1 Expenses. Each party shall pay its own expenses incurred in connection
with this Agreement and the other documents in connection herewith and the
transactions contemplated therein.
9.2 Reliance. Notwithstanding the "due diligence" investigations conducted,
and the opportunities to investigate and verify afforded, by each Party, each
Party agrees that the other Party or Parties are entitled to rely upon the
representations and warranties made by a Party in this Agreement and the other
documents executed, delivered or furnished in connection therewith.
9.3 Notice. All notices, demands, requests and other communications that
may be or are required to be given, made, or sent by any Party to any other
Party pursuant to this Agreement shall be in writing and shall be delivered (i)
personally, (ii) by courier, (iii) by registered or certified U.S. mail, return
receipt requested, postage prepaid, or (iv) by facsimile, to the following
addresses:
to Seller or Affiliates: to Purchaser:
USURF Communications, Inc. ZKID Network, Inc.
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇ Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ # ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇
Each Party may designate by notice, pursuant to this paragraph, a new address
to which any notice, demand, request or communication may thereafter be given,
made or sent. Each notice, demand, request or communication that is given
pursuant to this paragraph shall be deemed sufficiently given for all purposes
when delivered to or received by the addressee (with the return receipt,
delivery receipt, courier affidavit or fax confirmation being deemed conclusive
evidence of such delivery or receipt) or at the time delivery or receipt is
refused by the addressee.
9.4 Successors and Assigns. This Agreement and the rights, interests and
obligations hereunder shall be binding upon and shall inure to the benefits of
the Parties and their respective hers, personal representatives, successors and
permitted assigns. No Party may assign its rights or obligations under this
Agreement without the prior written consent of the other Parties; any purported
assignment without such consent shall be void.
9.5 Governing Law. The laws of the State of Colorado shall govern this
Agreement, its terms and conditions, the interpretation thereof, and the rights
and obligations of the Parties thereunder.
9.6 Amendment. This Agreement may be amended, modified or supplemented only
by a written instrument executed by the Party against which enforcement of the
amendment, modification or supplement is sought.
16
9.7 Severability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable, such provision shall be fully severable, and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision were never a part hereof; the remaining provisions of
this Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance; and in
lieu of such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar as possible to
such illegal, invalid or unenforceable provision, in a form which shall be
legal, valid and enforceable.
9.8 Confidentiality. At all times after the Effective Date, each of the
Parties will hold, and will cause its officers, representatives, attorneys,
advisers and affiliates and such affiliates' respective officers,
representatives, advisors, and affiliates to hold, in confidence and not
disclose to other persons for any reason whatsoever any part of this Agreement
or the terms or details of the transaction contemplated by this Agreement
(collectively, the "Information"), except to the extent (i) necessary for such
Party to consummate and give full effect to the transaction contemplated hereby,
(ii) such Information is otherwise available from third parties without
restriction on further disclosure or is required by order of any court or by law
or by any regulatory agency to which any Party is subject or in connection with
any civil or administrative proceeding (each Party agreeing to give prior
notice, to the extent practicable, to the other Party of any required disclosure
of the Information), or (iii) such Information is or becomes publicly known
other than through actions, direct or indirect, of the other Party, any of such
Party's officers, employees, representatives, attorneys, advisers or affiliates,
or any of such affiliates' respective employees, officers, representatives,
attorneys, advisers or affiliates.
9.9 Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
9.10 Entire Agreement. This Agreement constitutes the entire agreement, and
supersedes all other prior agreements and understandings, both written and oral,
between the Parties with respect to the subject matter hereof.
9.11 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed to be an original but all of which shall together
constitute one and the same Agreement.
[Remainder of this page is blank]
17
IN WITNESS WHEREOF, the parties have signed this Agreement on the dates
indicated below.
Seller: Purchaser:
USURF COMMUNICATIONS, INC. ZKID NETWORK, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
------------------------------ ------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
CEO
------------------------------ ------------------------------
Date Date
18