AGREEMENT AND PLAN OF REORGANIZATION
MODAVOX, INC.
KINO ACQUISITION SUB, INC.
KINO INTERACTIVE, LLC
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is dated as
of the latest date set forth on the signature page (the "Signature Date"), and
is among MODAVOX, INC., a Delaware corporation ("Modavox"); KINO ACQUISITION
SUB, INC., a Delaware corporation and wholly owned Subsidiary of Modavox to be
formed ("Subsidiary"); and KINO INTERACTIVE, LLC, an Arizona limited liability
company to be formed ("Kino"). Modavox, Subsidiary and Kino are sometimes
referred to individually as the "Party" and collectively as the "Parties."
STATEMENT OF PURPOSE
A. The Boards of Directors of Modavox and Subsidiary and the members of
Kino deem it advisable and in the best interests of each entity and its
respective holders of equity interests that Modavox and Kino combine to advance
their long-term business interests;
B. The combination of Modavox and Kino will be effected by the terms of
this Agreement through a transaction (the "Merger") in which (i) Kino will merge
with and into Subsidiary, and (ii) the members of Kino will become stockholders
of Modavox; and
C. For federal income tax purposes, it is intended that the Merger will
qualify as reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
AGREEMENT
In consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth below, the Parties agree as
follows:
ARTICLE 1
THE MERGER
1.1 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of this Agreement,
Modavox, Subsidiary and Kino will duly prepare, execute, acknowledge and
deliver to the Delaware Secretary of State an Agreement of Merger in such
form as is required by the relevant provisions of the Delaware Business
Corporation Law (the "DBCL") for filing as soon as practicable on or after
the Closing Date (as defined in Section 1.2). The Merger will be effective
upon the filing of the Certificate of Merger to be filed with and accepted
by the Delaware Secretary of State (the "Effective Time").
1.2 CLOSING. The closing of the Merger (the "Closing") will take place at 1:00
p.m., Arizona Time, in Phoenix, Arizona at a location Modavox specifies by
not later than February 28, 2006 (the "Closing Date"), provided that the
other closing conditions set forth in Article 6 have been met or waived as
provided in Article 6 at or prior to the Closing,
1.3 EFFECTS OF THE MERGER. At the Effective Time (i) the separate existence of
Kino will cease, and it will be merged with and into Subsidiary (sometimes
hereinafter the "Surviving Entity"), (ii) the Certificate of Incorporation
of Subsidiary will become the Certificate of Incorporation of the
Surviving Entity, and (iii) the Bylaws of Subsidiary will become the
Bylaws of the Surviving Entity. At and after the Effective Time, the
Surviving Entity will possess all the rights, privileges, powers and
franchises of a public as well as of a private nature, and be subject to
all the restrictions, disabilities and duties of Kino; and all singular
rights, privileges, powers and franchises of Kino, and all property, real,
personal and mixed, and all debts due to Kino on whatever account, as well
as for subscriptions for membership interests and all other things in
action or belonging to Kino, will be vested in the Surviving Entity, and
all property, rights, privileges, powers and franchises, and all and every
other interest will be thereafter as effectually the property of the
Surviving Entity as they were of Kino, and the title to any real estate
vested by deed or otherwise, in Kino, will not revert or be in any way
impaired but all rights of creditors and all liens upon any property of
Kino will be preserved unimpaired, and all debts, liabilities and duties
of Kino will thereafter attach to the Surviving Entity, and may be
enforced against it to the same extent as if such debts and liabilities
had been incurred by it.
1.4 DIRECTORS AND EXECUTIVE OFFICERS. The directors and executive officers of
Modavox immediately prior to the Effective Time will be the initial
directors, executive officers of the Surviving Entity, each of whom will
hold office in accordance with the organizational documents of the
Surviving Entity, until their respective successors are duly elected or
appointed. In addition, Kino will have the right to appoint two additional
directors to the board of directors of the Surviving Entity in addition to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ who has already been appointed to Modavox's Board of
Directors.
ARTICLE 2
CONVERSION OF SECURITIES
2.1 CONVERSION OF CAPITAL. As of the Effective Time, by virtue of the Merger
and without any action on the part of the holder of any membership
interests of Kino or capital stock of the Surviving Entity:
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(a) Capital Stock of Surviving Entity. Each issued and outstanding share
of the capital stock of Subsidiary will be converted into and become
one fully paid and nonassessable share of Common Stock of the
Surviving Entity.
(b) Conversion of Kino's Membership Interests. Subject to Section 2.2,
all of the issued and outstanding membership interests of Kino
("Kino's Membership Interests"), will be converted into the right to
receive eight million (8,000,000) shares of Modavox Common Stock,
two million (2,000,000) shares of Modavox Class A Convertible
Preferred Stock and two million (2,000,000) shares of Modavox Class
B Convertible Preferred Stock ("Merger Shares"). The Class A
Convertible Preferred Stock will have the attributes described in
the Certificate of Designation attached hereto as Exhibit 2.1(b-1).
The Class B Convertible Preferred Stock will have the attributes
described in the Certificate of Designation attached hereto as
Exhibit 2.1(b-2). Kino's Membership Interests, when so converted,
will no longer be outstanding and will automatically be canceled and
retired and will cease to exist, and each holder of Kino's
Membership Interests will cease to have any rights with respect
thereto, except the right to receive the Merger Shares to be issued
in consideration therefor in accordance with this Article 2.
(c) Exchange Procedures. Upon conversion of Kino's Membership Interests
pursuant to Section 2.1(b) into the right to receive shares of
Modavox Common Stock, each holder of the Kino Membership Interests
will be entitled to receive in exchange therefor a certificate
representing that number of whole Merger Shares which such holder
has the right to receive pursuant to the provisions of Section
2.1(b); provided, however, that the Modavox Escrow Shares and Kino
Escrow Shares (as such terms are defined in Sections 2.3(a) and
2.3(b)) shall be retained by the Escrow Agent (as such term is
defined in Section 2.3(a)) in accordance with the provisions of the
Escrow Agreement (as such term is defined in Section 2.3(a)). The
Merger Shares (including the Kino Escrow Shares) and the Modavox
Escrow Shares will be deemed to have been issued at the Effective
Time.
(d) No Further Ownership Rights in Kino's Membership Interests. All
shares of Modavox Common Stock issued upon the exchange of Kino's
Membership Interests in accordance with the terms hereof will be
deemed to have been issued in full satisfaction of all rights
pertaining to Kino's Membership Interests, and there will be no
further registration of transfers on the stock transfer books of the
Surviving Entity of Kino's Membership Interests which were
outstanding immediately prior to the Effective Time.
(e) No Fractional Shares. No certificate or scrip representing
fractional shares of Modavox Common Stock will be issued upon the
exchange of Kino's Membership Interests, and such fractional shares
will not entitle the owner thereof to vote or to any rights of a
stockholder of Modavox. If there are fractional shares, each member
will round up such fractional share that is one-half or greater to
the nearest whole number and round down to the nearest whole number
for each fractional share that is less than one-half.
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2.2 STOCK ESCROW.
(a) Modovox Escrow Shares. In addition to the Merger Shares, one million
two hundred thousand (1,200,000) shares of Modavox Common Stock (the
"Modavox Escrow Shares") will be issued to each holder of the Kino
Membership Interests pro rate in accordance with their Kino
Membership Interests and deposited in escrow (the "Escrow") with the
Company's transfer agent, Interwest Transfer Co., Inc. ("Escrow
Agent"), to be held and administered in accordance with an Escrow
Agreement, substantially in the form attached hereto as Exhibit 2.3
(the "Escrow Agreement"). While in Escrow, all voting rights with
respect to the Modavox Escrow Shares will reside with Modavox's
Board of Directors. Any securities received by the Escrow Agent in
respect of any Modavox Escrow Shares held in the Escrow as a result
of any stock split or combination of shares of Modavox Common Stock,
payment of a stock dividend or other stock distribution in or on
shares of Modavox Common Stock, or change of Modavox Common Stock
into any other securities pursuant to or as a part of a merger,
consolidation, acquisition of property or stock, separation,
reorganization or liquidation of Modavox, or otherwise, will be held
by the Escrow Agent as, and will be included within the definition
of, Modavox Escrow Shares. The Modavox Escrow Shares will be
available to satisfy any indemnification obligations arising under
Section 7.2 during the indemnification period specified in Section
7.1.
(b) Kino Escrow Shares. 15% of the Merger Shares (the "Kino Escrow
Shares") will be deposited in the Escrow with the Escrow Agent, to
be held and administered in accordance with the Escrow Agreement,
such Kino Escrow Shares to be withheld and deducted, pro rata, from
the Merger Shares otherwise issuable to each holder of Kino's
Membership Interests. By approving the Merger, the holders of the
Merger Shares will agree to be bound with respect to the
indemnification obligations of Kino arising under Section 7.3.
Notwithstanding the escrow of the Kino Escrow Shares, dividends or
other distributions declared and paid on such shares will continue
to be paid by Modovox to the holders of Kino Escrow Shares and all
voting rights with respect to such shares will inure to the benefit
of and be enjoyed by such stockholders. Any securities received by
the Escrow Agent in respect of any Kino Escrow Shares held in escrow
as a result of any stock split or combination of shares of Modavox
Common Stock, payment of a stock dividend or other stock
distribution in or on shares of Modavox Common Stock, or change of
Modavox Common Stock into any other securities pursuant to or as a
part of a merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation of Modavox, or otherwise,
will be held by the Escrow Agent as, and will be included within the
definition of, Kino Escrow Shares. The Kino Escrow Shares will be
available to satisfy any indemnification obligations arising under
Section 7.3 during the indemnification period specified in Section
7.1.
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2.3 STOCKHOLDER REPRESENTATIVE.
(a) Each holder of Kino's Membership Interests who has approved the
Merger and received Merger Shares will have irrevocably authorized
and appointed the chief executive officer of the Surviving
Corporation (the "Stockholder Representative"), with full power of
substitution and resubstitution, as such stockholder's
representative and true and lawful attorney-in-fact and agent to
execute in the name and on behalf of such stockholder the Escrow
Agreement and any other agreement, certificate, instrument or
document to be delivered by such stockholder in connection with the
Escrow Agreement.
(b) The Stockholder Representative will not be liable for any act done
or omitted hereunder or under the Escrow Agreement as the
Stockholder Representative while acting in good faith and in the
exercise of reasonable judgment. The stockholders on whose behalf
the Kino Escrow Shares and Modavox Escrow Shares were contributed to
the Escrow will indemnify the Stockholder Representative and hold
the Stockholder Representative harmless against any loss, liability
or expense incurred without gross negligence or bad faith on the
part of the Stockholder Representative and arising out of or in
connection with the acceptance or administration of the Stockholder
Representative's duties hereunder and under the Escrow Agreement,
including the reasonable fees and expenses of any legal counsel
retained by the Stockholder Representative.
(c) A decision, act, consent or instruction of the Stockholder
Representative will constitute a decision of the stockholders on
whose behalf the Kino Escrow Shares and Modavox Escrow Shares were
contributed and will be final, binding and conclusive upon such
stockholders; and the Escrow Agent and the Indemnitee (as defined in
Section 7.4) may rely upon any such decision, act, consent or
instruction of the Stockholder Representative as being the decision,
act, consent or instruction of such stockholders. The Escrow Agent
and the Indemnitee are hereby relieved from any liability to any
person for any acts done by them in accordance with such decision,
act, consent or instruction of the Stockholder Representative.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF KINO. Kino hereby represents and
warrants to Modavox that except as set forth on Kino's exceptions schedule
("Kino's Exceptions Schedule") attached hereto as Schedule 3.1:
(a) Organization and Standing. Kino is a limited liability company duly
organized, validly existing and in good standing, all under the laws
of the State of Arizona, and has all requisite power and authority
to conduct its business in the place where the business is now
conducted and to own, lease and operate its assets, as now
conducted, owned, leased and operated. Kino is duly qualified or
licensed to do business and is in good standing under the laws of
each state or other jurisdiction in which the nature of the business
or location of the assets requires such qualification or licensing,
and where the failure to be so qualified or licensed and in good
standing would not individually or in the aggregate have a material
adverse effect on Kino.
(b) Authority. Kino has the full legal right, power, capacity and
authority to enter into this Agreement and all other agreements,
instruments and documents to be signed and delivered by Kino in
connection herewith (the "Sale Documents"), and to carry out its
obligations hereunder and thereunder. The managing members of Kino
(i) has made assessments of the value of Kino and has taken other
actions as to satisfy the fiduciary duties that must be satisfied by
it to enable Kino to enter into this Agreement and to render this
Agreement binding upon Kino in accordance with its terms and (ii)
has duly approved the Sale Documents to which Kino is a party and
has duly authorized the execution and delivery of the Sale Documents
to which Kino is a party and the consummation of the transactions
contemplated thereby. Kino has taken, or will prior to the Closing
Date have taken, all actions necessary to authorize it to enter into
and perform its obligations under this Agreement and the Sale
Documents, and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Kino, and
this Agreement and the Sale Documents constitute the legal, valid
and binding obligations of Kino enforceable against Kino in
accordance with their terms.
(c) Compliance with Law. Kino has complied, and is in compliance, with
all applicable federal, state and local laws, statutes, licensing
requirements, rules and regulations, and judicial or administrative
decisions applicable to Kino, except where failure to be in
compliance therewith would not have a material adverse effect upon
Kino. To Kino's knowledge, Kino has been granted all permits from
federal, state, and local government regulatory bodies necessary to
carry on its business, all of which are currently valid and in full
force and effect. There is no order issued, investigation or
proceeding pending or, to Kino's knowledge, threatened, or notice
served with respect to any violation of any law, ordinance, order,
writ, decree, rule or regulation issued by any federal, state, local
or foreign court or governmental or regulatory agency or
instrumentality applicable to Kino.
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(d) No Conflict or Default. Neither the signing and delivery of this
Agreement nor compliance with the terms and provisions hereof,
including the consummation of the transactions contemplated hereby,
will conflict with or result in the breach of any term, condition or
provision of either Kino's certificate of organization or operating
agreement, or any material agreement, deed, contract, mortgage,
indenture, writ, order, decree, legal obligation or instrument to
which Kino is a party or by which it is or may be bound or
constitute a default (or an event which, with the lapse of time or
the giving of notice, or both, would constitute a default)
thereunder or, to Kino's knowledge, violate any statute, regulation
or ordinance of any governmental authority.
(e) Brokers' and Finders' Fees. Kino is not obligated to pay any fees or
expenses of any broker or finder in connection with the origin,
negotiation or signing of this Agreement or in connection with any
transactions contemplated hereby.
(f) Taxes.
(i) All returns and reports in respect of Taxes (as hereinafter
defined) required to be filed with respect to Kino have been
timely filed. All Taxes required to be shown on such returns
and reports or otherwise due have been timely paid. All such
returns and reports are true, correct and complete in all
material respects. No adjustment relating to such returns has
been proposed formally or informally by any Tax authority
(insofar as either relates to the activities or income of Kino
or could result in liability of Kino on the basis of joint
and/or several liability) and, to the best knowledge of Kino
(after due inquiry), no basis exists for any such adjustment.
There are no pending or, to the best knowledge of Kino (after
due inquiry), threatened actions or proceedings for the
assessment or collection of Taxes against Kino. Kino has not
granted any waiver of any statute of limitations with respect
to, or any extension of a period for the assessment of any
Tax. There are no Tax liens on any assets of Kino, except
liens for current Taxes not yet due. The accruals and reserves
for Taxes reflected in Kino's financial statements, and the
accruals and reserves provided on Kino's Exceptions Schedule,
are adequate to satisfy all liabilities for Taxes relating to
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Kino for periods through the Effective Time (without regard to
the materiality thereof). Kino is not a party to any contract,
agreement, plan or arrangement, including but not limited to
the provisions of this Agreement, that would result,
separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the
Code. Kino is not a party to or bound by any tax sharing or
tax allocation or other agreement, instrument or arrangement
which would prohibit or limit Kino, with respect to any period
after the Effective Time, (i) from entering into or performing
under any tax sharing or tax allocation agreement, or any
other arrangement regarding the allocation, among Modavox and
Kino, of federal, state and local income, franchise or other
tax liabilities, credits, deductions or other tax-related
matters, or (i) from consenting to join in the filing of a
consolidated federal income tax return. Kino is not aware of
any agreement, plan or other circumstance that would prevent
the Merger from qualifying under Section 368(a) of the Code.
(ii) As used in this Agreement, "Tax" or "Taxes" means any and all
taxes, fees, levies, duties, tariffs, imposts, and other
charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed
with respect thereto) imposed by any governmental or taxing
authority including, without limitation: taxes or other
charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales use, capital
stock, payroll, employment, social security, workers'
compensation, unemployment compensation, or net worth; taxes
or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added, or gains taxes;
license, registration and documentation fees; and customs'
duties, tariffs, and similar charges. Kino has not to its
knowledge violated any of the health care continuation
coverage requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") prior to the Closing
Date.
(g) Books and Records. The books and records of Kino to which Modavox
and its accountants and attorneys have been given access are the
true books and records of Kino, and truly and fairly reflect the
underlying facts and transactions in all material respects.
(h) Interested Party Relationships. Kino has no material financial
interest, direct or indirect, in any material supplier or customer
or other party to any contract, which is material to Modavox or
Kino, or in competition with, Modavox or Kino.
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(i) Labor Matters.
(i) To Kino's knowledge, Kino is in compliance in all material
respects with Title VII of the Civil Rights Act of 1964, as
amended, the Fair Labor Standards Act, as amended, and the
Occupational Safety and Health Act of 1970, as amended.
(ii) There are no written or oral separation, severance or golden
parachute agreements or understandings with the service
providers of Kino.
(iii) Kino (a) is in compliance in all material respects with all
applicable foreign, federal, state and local laws, rules and
regulations respecting employment, employment practices, terms
and conditions of employment and wages and hours, in each
case, with respect to employees, (b) has withheld all amounts
required by law or by agreement to be withheld from the wages,
salaries and other payments to employees, (c) is not liable
for any arrears of wages or any taxes of any penalty for
failure to comply with any of the foregoing, and (d) is not
liable for any payment to any trust or other fund or to any
governmental or administrative authority, with respect to
unemployment compensation benefits, social security or other
benefits or obligations for employees (other than routine
payments to be made in the normal course of business and
consistent with past practice).
(j) Employees and Employee Benefit Plans.
(i) Except as set forth on Kino's Exception's Exhibit, (i) Kino is
not a party to any pension, profit sharing, savings,
retirement or other deferred compensation plan, or any bonus
(whether payable in cash or stock) or incentive program, or
any group health plan (whether insured or self-funded), or any
disability or group life insurance plan or other employee
welfare benefit plan, or to any collective bargaining
agreement or other agreement, written or oral, with any trade
or labor union, employees association or similar organization
(a "Plan"); (ii) Kino does not have any plan or commitment,
whether legally binding or not, to establish a Plan; and (iii)
Kino is not a party to, nor has it made any contribution to or
otherwise incurred any obligation under, any "multi-employer
plan" as defined in Section 3(37) of the Employee Retirement
Income Security Act of 1974, as amended.
(ii) There are no strikes or labor disputes pending or, to the
knowledge of Kino, threatened by, or, any attempts at union
organization of, any of the Employees. None of the Employees
whose continued services are material to Kino has terminated
employment, and to the knowledge of Kino no such Employee or
group of Employees intends to terminate their employment.
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(iii) To the knowledge of Kino, no Employee is or will be in
violation of any judgment, decree or order, or any term of any
employment contract, or other contract or agreement relating
to the relationship of any of such Employee with Kino or any
other party because of the nature of the business conducted by
Kino.
(iv) Kino has not, to its knowledge, violated any of the health
care continuation coverage requirements of COBRA prior to the
Closing Date.
(k) Environmental Matters.
(i) As of the date hereof, no material amount of any substance
that has been designated by applicable law or regulation to be
radioactive, toxic, hazardous or otherwise a danger to health
or the environment, excluding office, janitorial and similar
substances (a "Hazardous Material"), is present, as a result
of the actions of Kino or, to Kino's knowledge, as a result of
any actions of any third party or otherwise, in, on or under
any property, including the land and the improvements, ground
water and surface water, that Kino has at any time owned,
operated, occupied or leased. To the knowledge of Kino, no
underground storage tanks are present under any property that
Kino has at any time owned, operated, occupied or leased.
(ii) At no time has Kino transported, stored, used, manufactured,
disposed of, released or exposed its employees or others to
Hazardous Materials (collectively, "Hazardous Materials
Activities") in violation of any law, rule, regulation or
treaty promulgated by any governmental entity, except for
Hazardous Materials Activities which have not had and are not
likely to have a material adverse effect on Kino.
(iii) Kino currently holds all environmental approvals, permits,
licenses, clearances and consents (the "Environmental
Permits") necessary for the conduct of its business as such
businesses is currently being conducted, except for such
Environmental Permits the absence of which would not be likely
to have a material adverse effect on Kino.
(iv) No action, proceeding, writ, injunction or claim is pending
or, to the knowledge of Kino, threatened concerning any
Environmental Permit or any Hazardous Materials Activity of
Kino. Kino is not aware of any fact or circumstance which
could reasonably be expected to involve Kino in any
environmental litigation or impose upon Kino any liability
concerning Hazardous Materials Activities which would be
reasonably likely to have a material adverse effect on Kino.
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(l) Litigation. Except as set forth in Kino's Exceptions Schedule, there
is no claim, litigation, action, suit or proceeding, administrative
or judicial, pending or, to Kino's knowledge, threatened against
Kino relating to Kino, at law or in equity, before any federal,
state, local or foreign court, regulatory agency, other governmental
authority or any arbitration or mediation forum, including any
unfair labor practice or grievance proceedings or otherwise.
(m) Financial Statements. Kino has delivered, or will deliver, to
Modavox its pro forma balance sheets (the "Balance Sheets") as of
October 31, 2005 and December 31, 2004 and its pro forma income
statements for the ten months ended October 31, 2005 and the fiscal
year or period ended December 31, 2004 (together with the Balance
Sheets, the "Financial Statements"). The Financial Statements (i)
are in accordance with Kino's books and records, and (ii) fairly and
accurately present Kino's financial condition at the respective
dates therein indicated and the results of operations for the
respective periods therein specified. Kino does not have any
material debt, liability or obligation of any nature, whether
accrued, absolute, contingent or otherwise, and whether due or to
become due, that is not reflected, reserved against or disclosed in
the Financial Statements, except for those that may have been
incurred after December 31, 2004 in the ordinary course of its
business consistent with past practice, and which are disclosed by
Kino on its Exceptions Schedule. Since the Balance Sheet Date, and
except as set forth on Kino's Exceptions Schedule, there has not
been:
(i) Any material adverse change in Kino's financial condition,
results of operation, assets, or liabilities or any
occurrence, circumstance or combination thereof which
reasonably could be expected to result in such a material
adverse change;
(ii) Any change, other than in the ordinary course of business,
made by Kino in its method of operating the business or its
accounting practices relating thereto;
(iii) Any sale, lease, or disposition of, or any agreement to sell,
lease or dispose of any of the assets, other than sales,
leases or dispositions in the usual and ordinary course of
business and other than pursuant to this Agreement;
(iv) Any modification, waiver, change, amendment, release,
rescission, accord and satisfaction, or termination of, or
with respect to, any term, condition or provision of any
material contract relating to or affecting Kino, the business,
the assets and/or the liabilities, other than any satisfaction
by performance in accordance with the terms thereof in the
usual and ordinary course of business;
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(v) Any adverse relationships or conditions with vendors,
suppliers or customers that may have a material adverse effect
on Kino;
(vi) Any return of any of Kino's products by a purchaser or user
thereof (other than for minor nonrecurring warranty problems),
and Kino is not aware of any (i) pending warranty claims for
such products, (ii) right to return such products (other than
units under customary evaluation terms), or (iii) evaluation
units expected to be returned after their evaluation period;
(vii) Any borrowing or lending of money by Kino, including to or
from the members or managers thereof (the "Principals"), but
excluding for this purpose sales made on ordinary trade terms;
(viii) Any other event or condition of any character that has had a
material adverse effect, or could reasonably be expected to
have a material adverse effect, on Kino; or
(ix) Any agreement by Kino and/or the Principals to do, cause or
effect any of the foregoing events, set forth in sections (i)
through (viii) above.
(n) Undisclosed Liabilities. There are no material debts, claims,
liabilities or obligations with respect to Kino or to which the
assets are subject, liquidated, unliquidated, accrued, absolute,
contingent or otherwise, that are not identified in Kino's Financial
Statements or on Kino's Exceptions Schedule.
(o) Intellectual Property.
(i) Kino owns, is licensed or is otherwise entitled to exercise,
without restriction, all rights to all material intellectual
property and all other material tangible and intangible
information or material in any form (the "Intellectual
Property"), as used or currently proposed to be used by Kino,
without, to the knowledge of Kino, any conflict with or
infringement of the rights of others. A schedule of the
Intellectual Property is attached hereto as Schedule 3.1(o).
(ii) Kino is the owner or exclusive licensee of, with all right,
title and interest in and to, free and clear of any Liens (as
hereinafter defined), the Intellectual Property, and has the
exclusive right to make, have made, use, sell, copy, create
derivative works of, distribute, publicly perform, publicly
display, license, assign, transfer, convey or dispose thereof
or the products, processes and materials covered thereby. All
patents and unregistered and registered trademarks, service
marks, and other company, product or service identifiers and
all registered and unregistered copyrights held by Kino are
valid and enforceable.
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(iii) To the knowledge of Kino, there has not been, and there is not
now, any unauthorized use, infringement or misappropriation of
any of the Intellectual Property Rights by any third party
service provider of Kino, by its Principals, or by any other
third party.
(iv) No person has asserted or threatened to assert any claims with
respect to any of the Intellectual Property (i) contesting the
right of Kino to use, exercise, sell, license, transfer or
dispose of any of the Intellectual Property or any products,
processes or materials covered thereby, or (ii) challenging
the ownership, validity or enforceability of any of the
Intellectual Property. None of the Intellectual Property is
subject to any outstanding order, judgment, decree,
stipulation or agreement related to or restricting in any
manner the licensing, assignment, transfer or conveyance
thereof by Kino.
(v) Kino is in material compliance with the terms and conditions
of all licenses, sublicenses and other agreements to which
Kino is a party and pursuant to which Kino is authorized to
use, exercise, or receive any benefit from any intellectual
property non-exclusively licensed to Kino (the "Licensed
Intellectual Property"). Kino has no knowledge of any
assertion, claim or threatened claim that Kino and/or its
Principals have breached any terms or conditions of such
licenses, sublicenses or other agreements.
(vi) None of the Licensed Intellectual Property is subject to any
outstanding order, judgment, decree, stipulation or agreement
related to or restricting in any manner the use by or
licensing thereof to Kino.
(vii) Kino has the right to assign all the Intellectual Property and
the Licensed Intellectual Property to Modavox pursuant to the
terms of this Agreement. Kino is not, nor will it be, as a
result of the signing and delivery of this Agreement or the
performance of its obligations hereunder, in violation of, nor
will it lose or in any way impair, any material rights
pursuant to any license, sublicense or agreement pertaining to
the Intellectual Property or Licensed Intellectual Property.
If required by the terms of any licenses, sublicenses or other
agreements with respect to the Licensed Intellectual Property,
Kino has secured or will promptly secure valid written
consents from the licensors thereof to the assignment of such
Licensed Intellectual Property to Modavox pursuant to the
terms of this Agreement.
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(viii) The manufacture, marketing, license, sale or use of any
product or service as now used or offered or proposed for use
or sale by Kino does not, to the knowledge of Kino, infringe
any copyright, patent, trademark, service ▇▇▇▇, trade secret
or other intellectual property right of any third party or
violate any license or agreement with any third party. Kino
knows of no claims and has not been sued or charged in writing
as a defendant in any claim, suit, action or proceeding which
involves a claim of infringement of any patents, trademarks,
service marks, trade secret rights, copyrights or other
intellectual property rights and which has not been finally
terminated prior to the date hereof; there are no such charges
or claims outstanding; and Kino does not have any outstanding
restrictions or infringement liability with respect to any
patent, trade secret, trademark, service ▇▇▇▇, copyright or
other intellectual property right of another.
(ix) Kino has not entered into any agreement to indemnify any other
person against any charge of infringement of any third party
intellectual property right, the Intellectual Property or the
Licensed Intellectual Property.
(x) Kino has taken reasonable steps to protect and preserve the
confidentiality of all inventions, algorithms, formulas,
schematics, technical drawings, ideas, know-how, all other
processes not otherwise protected by patents or patent
applications, source code, object code, program listings and
trade secrets related to Kino, or owned by Kino (collectively,
the "Confidential Information"), including the marking thereof
with appropriate "Proprietary" or "Confidential" legends, the
establishment of policies for the handling, disclosure and use
of the Confidential Information, and the acquisition of valid
written nondisclosure agreements from any party receiving the
Confidential Information. All the Confidential Information is
presently and as of the Closing Date will be located at Kino's
address as set forth in this Agreement. All use, disclosure or
appropriation of the Confidential Information by a third party
has been pursuant to the terms of a written agreement between
Kino and such third party. All use, disclosure or
appropriation of inventions, algorithms, formulas, schematics,
technical drawings, ideas, know-how, all other processes not
otherwise protected by patents or patent applications, source
code, object code, program listings and trade secrets not
owned by Kino (the "Licensed Confidential Information") has
been pursuant to the terms of a written agreement between Kino
and the owner of the Licensed Confidential Information, or is
otherwise lawful. Kino has delivered to Modavox copies of all
nondisclosure agreements or other agreements relating to the
handling, disclosure and use of the Confidential Information
and Licensed Confidential Information, and Kino knows of no
breaches or claims relating to such agreements.
14
(p) Contracts and Commitments.
(i) Schedule 3.1(p)(i) lists all outstanding contracts (other than
contracts with customers) involving an annual expense in
excess of five thousand ($5,000) setting forth the parties and
the dates thereto that relate to the business, whether or not
in writing, to which Kino is a party, and/or to which any of
Kino's assets are subject. Kino has performed all of its
obligations under the terms of each such contract, and is not
in default thereunder. No event or omission has occurred
which, but for the giving of notice or lapse of time or both,
would constitute a default by any party thereto under any such
contract, where such default by any party could have a
material adverse effect on Kino. Each such contract is in full
force and effect and valid and binding on all parties thereto.
Kino has not received any notice of default, cancellation or
termination in connection with any such contract, and is not
aware that any such action is currently contemplated or
threatened.
(ii) Schedule 3.1(p)(ii) lists all contracts that require a
novation or consent to assignment, as the case may be, prior
to the Closing Date so that Modavox may be made a party in
place of Kino, or as assignee ("Contracts Requiring Novation
or Consent to Assignment"). Such listing is complete, accurate
and includes every contract of which the failure to obtain
such novation or consent to assignment would have a material
adverse effect on Modavox's ability to operate the business in
the same manner as the business was operated by Kino prior to
the Closing Date.
(q) Assets. All of Kino's assets are in good operating condition and
repair (normal wear and tear excepted). Except as set forth on
Kino's Exceptions Schedule, Kino has good and marketable title to
its assets, free and clear of any pledges, liens, encumbrances,
security interests, equities, charges and restrictions of any nature
whatsoever (collectively, the "Liens").
(r) Employees and Consultants. Schedule 3.1(r) lists all of the
employees of Kino and consultants to Kino, who provide services for
Kino. Except as listed on Kino's Exceptions Schedule, all severance,
bonus and vacation payments by Kino which are or were due under the
terms of any agreement have been paid or accrued as a liability on
Kino Financial Statements.
15
(s) Customers. Schedule 3.1(s) lists all customers of Kino. Prior to the
Closing Date, Kino will furnish Modavox with complete and accurate
copies of all current written agreements with such customers.
(t) Accounts Receivable. Except as listed on Kino's Exceptions Schedule,
the amount of all accounts receivable, unbilled invoices and other
debts due or recorded in the records and books of account of Kino as
being due to Kino at the Closing Date are expected to be collectible
in the ordinary course of business; no contest with respect to the
amount or validity of any material amount is pending or, to the best
of Kino's knowledge, contemplated or threatened; and no material
amount of such accounts receivable or other debts is or will at the
Closing Date be subject to any counterclaim, return or set-off. The
values at which accounts receivable are carried reflect the accounts
receivable valuation policy of Kino, which is consistent with its
past practice.
(u) Complete Disclosure. To the knowledge of Kino, no representation or
warranty by Kino in this Agreement, and no exhibit, schedule,
statement, certificate or other writing furnished to Modavox
pursuant to this Agreement or in connection with the transactions
contemplated hereby, contains any untrue statement of a material
fact or omits or will omit to state a material fact necessary to
make the statements contained herein and therein in the context in
which they were made not misleading.
3.2 REPRESENTATIONS AND WARRANTIES OF MODAVOX AND SUBSIDIARY. Modavox and
Subsidiary hereby represent and warrant to Kino that except as set forth
on Modavox's exceptions schedule ("Modavox's Exceptions Schedule")
attached hereto as Schedule 3.2:
(a) Organization and Standing. Modavox is a corporation duly organized,
validly existing and in good standing, under the laws of the state
of Delaware, and has all requisite power and authority to conduct
its business in the place where that business is now being
conducted, to own or use the properties and assets that it purports
to own or use. Modavox is duly qualified or licensed to do business
in each of the jurisdictions in which the nature of its business or
location of its assets requires such qualification or licensing, and
where the failure to be so qualified would have a material adverse
effect on its business. Upon its due formation, Subsidiary will be a
corporation duly organized, validly existing and in good standing,
under the laws of the state of Delaware, and have all requisite
power and authority to conduct its business in the place where that
business will be conducted, to own or use the properties and assets
that it will purport to own or use.
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(b) Authority. Modavox has, and prior to the Closing Date Subsidiary
will have, full legal right, power, capacity and authority to enter
into this Agreement, together with all other agreements, instruments
and documents to be signed and delivered by Modavox and Subsidiary
in connection herewith (the "Modavox Documents"), and to carry out
their obligations hereunder and thereunder. Modavox and Subsidiary
have taken, or will prior to the Closing Date have taken, all
actions necessary to authorize them to enter into and perform their
obligations under this Agreement and the Modavox Documents, and to
consummate the transactions contemplated hereby. This Agreement has
been duly signed and delivered by Modavox, and this Agreement and
the Modavox Documents constitute legal, valid and binding
obligations of Modavox enforceable against Modavox in accordance
with their terms.
(c) Capital Stock. The authorized capital stock of Modavox consists of
one hundred million (100,000,000) shares of common stock, par value
$.0001 per share (the "Modavox Common Stock"), and twenty-five
million (25,000,000) shares of preferred stock, par value $.0001 per
share (the "Modavox Preferred Stock"), of which fifteen million six
hundred three thousand five hundred seventeen (15,603,517) shares of
Modavox Common Stock are issued and outstanding as of the date
hereof. All such shares are validly issued, fully paid and
non-assessable, and they constitute all of the issued and
outstanding shares of the capital stock of Modavox. None of the
issued and outstanding shares of Modavox stock was issued in
violation of any preemptive rights. Except as set forth on Modavox's
Exceptions Schedule, there are (i) no options, warrants, convertible
securities or other rights, agreements, arrangements or commitments
of any character obligating Modavox to issue or sell any shares of
Modavox Common Stock or Modavox Preferred Stock or other interest in
Modavox; (ii) no outstanding contractual obligations requiring
Modavox to repurchase, redeem or otherwise acquire any shares of
Modavox Common Stock or to provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in, any
other person; or (iii) no voting trusts, stockholder agreements,
proxies or other agreements or understandings in effect with respect
to the voting or transfer of any of the shares of Modavox Common
Stock or Modavox Preferred Stock and to which Modavox is a party.
(d) Financial Statements. Modavox has delivered to Kino the balance
sheet (the "Modavox Balance Sheet") of Modavox as of August 31, 2005
and the income statements of Modavox for the year ended February 28,
2005 and the fiscal quarter ended August 31, 2005 (together with the
Modavox Balance Sheet, the "Modavox Financial Statement"). The
Modavox Financial Statement (i) is in accordance with the books and
records of Modavox and (ii) fairly and accurately present the
financial condition of Modavox at the date therein indicated and the
results of operations for the respective period therein specified.
Modavox does not have any material debt, liability or obligation of
any nature, whether accrued, absolute, contingent or otherwise, and
whether due or to become due, that is not reflected, reserved
against or disclosed in the Modavox Financial Statement, except for
those that may have been incurred after August 31, 2005 in the
ordinary course of its business consistent with past practice, and
which are disclosed by Modavox on Modavox's Exceptions Schedule.
Since the Balance Sheet Date, and except as set forth on Modavox's
Exceptions Schedule, there has not been:
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(i) Any material adverse change in the financial condition,
results of operation, assets, or liabilities of Modavox or any
occurrence, circumstance or combination thereof which
reasonably could be expected to result in such a material
adverse change;
(ii) Any change, other than in the ordinary course of business,
made by Modavox in its method of operating the business or its
accounting practices relating thereto;
(iii) Any sale, lease, or disposition of, or any agreement to sell,
lease or dispose of any of the assets, other than sales,
leases or dispositions in the usual and ordinary course of
business and other than pursuant to this Agreement;
(iv) Any modification, waiver, change, amendment, release,
rescission, accord and satisfaction, or termination of, or
with respect to, any term, condition or provision of any
material contract relating to or affecting Modavox, the
business, the assets and/or the liabilities, other than any
satisfaction by performance in accordance with the terms
thereof in the usual and ordinary course of business;
(v) Any adverse relationships or conditions with vendors,
suppliers or customers that may have a material adverse effect
on Modavox;
(vi) Any borrowing or lending of money by Modavox, including to or
from the Principals, but excluding for this purpose sales made
on ordinary trade terms;
(vii) Any other event or condition of any character that has had a
material adverse effect, or could reasonably be expected to
have a material adverse effect, on Modavox; or
(viii) Any agreement by Modavox and/or its Principals to do, cause
or effect any of the foregoing events, set forth in sections
(1) through (7) above.
(e) Undisclosed Liabilities. There are no material debts, claims,
liabilities or obligations with respect to Modavox or to which the
assets are subject, liquidated, unliquidated, accrued, absolute,
contingent or otherwise, that are not identified in the Modavox
Financial Statements or on Modavox's Exceptions Schedule.
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(f) Indebtedness. Modavox's Exceptions Schedule contains a complete and
accurate list of all direct and indirect (i) indebtedness of Modavox
for borrowed money (including commitments, lines of credit and other
credit availability); and (ii) guaranties of Modavox, and Modavox is
current in its payment of all such obligations.
(g) Taxes. Except as disclosed in Modavox's Exceptions Schedule, all
material Tax returns, statements, reports and forms (including
estimated Tax returns and reports and information returns and
reports) required to be filed with any Tax authority with respect to
any Tax period ending on or before the Closing Date by or on behalf
of Modavox, have been or will be completed and filed when due
(including any extensions of such due date), and all amounts shown
due thereon have been or will be paid on or before such due date.
Except as disclosed in Modavox's Exceptions Schedule, to the
knowledge of Modavox, Modavox has withheld and paid to the
applicable financial institution or Tax authority all amounts
required to be withheld. Except as disclosed in Modavox's Exceptions
Schedule, to the best knowledge of Modavox, there is no material
claim, audit, action, suit, proceeding or investigation now pending
or threatened against or with respect to Modavox in respect of any
Tax or assessment nor is there any basis therefor. Except as
disclosed in Modavox's Exceptions Schedule, no notice of deficiency
or similar document of any Tax authority has been received by
Modavox for any material amount. Modavox is not aware of any
agreement, plan or other circumstance that would prevent the Merger
from qualifying under Section 368(a) of the Code.
(h) Compliance with Laws. Modavox is in compliance with applicable
federal, state and local laws, statutes, licensing requirements,
rules and regulations, and judicial or administrative decisions
applicable to its business, except where failure to be in compliance
therewith would not have a material adverse effect upon Modavox. To
the knowledge of Modavox, Modavox has been granted all permits from
federal, state, and local government regulatory bodies necessary to
carry on its business, all of which are currently valid and in full
force and effect. There is no order issued, investigation or
proceeding pending or, to the knowledge of Modavox, threatened, or
notice served with respect to any violation of any law, ordinance,
order, writ, decree, rule or regulation issued by any federal,
state, local or foreign court or governmental or regulatory agency
or instrumentality applicable to Modavox.
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(i) Intellectual Property.
(i) Modavox owns, or is licensed or otherwise possesses legally
enforceable rights to use, all material intellectual property
that is used in the business of Modavox.
(ii) There is no material unauthorized use, disclosure,
infringement or misappropriation of any intellectual property
rights of Modavox, any trade secret material to Modavox, or
any intellectual property right of any third party to the
extent licensed by or through Modavox, and Modavox has not
entered into any agreement to indemnify any other person
against any charge of infringement of any intellectual
property, other than indemnification provisions contained in
sales invoices arising in the ordinary course of business.
(iii) Modavox has not, nor will it be as a result of the signing and
delivery of this Agreement or the performance of its
obligations hereunder, in breach of any license, sublicense or
other agreement relating to its intellectual property.
(j) Litigation. There is no claim, litigation, action, suit or
proceeding, administrative or judicial, pending or, to Modavox's
knowledge, threatened against Modavox relating to this Agreement or
the transactions contemplated hereunder, at law or in equity, before
any federal, state, local or foreign court, regulatory agency, or
other governmental authority, which could result in the institution
of legal proceedings to prohibit or restrain the consummation or
performance of this Agreement or the transactions contemplated
hereby, or claim damages as a result of this Agreement or the
transactions contemplated hereby.
(k) No Conflict or Default. Neither the signing and delivery of this
Agreement, nor compliance with the terms and provisions hereof,
including the consummation of the transactions contemplated hereby,
will conflict with or result in the breach of any term, condition or
provision of Modavox's certificate of incorporation or bylaws, or of
any agreement, deed, contract, mortgage, indenture, writ, order,
decree, legal obligation or instrument to which Modavox is a party,
or by which it is or may be bound or constitute a default (or an
event which, with the lapse of time or the giving of or notice, or
both, would constitute a default) thereunder, or to Modavox's
knowledge, violate any statute, regulation or ordinance of any
governmental authority.
(l) Labor Relations. To the knowledge of Modavox, Modavox is in
compliance in all material respects with Title VII of the Civil
Rights Act of 1964, as amended, the Fair Labor Standards Act, as
amended, the Occupational Safety and Health Act of 1970, as amended,
all applicable federal state and local laws, rules and regulations
relating to employment, and all applicable laws, rules and
regulations governing payment of minimum wages and overtime rates
and the withholding and payment of taxes from compensation of
employees.
20
(m) Brokers' and Finders' Fees. Modavox is not obligated to pay any fees
or expenses of any broker or finder in connection with the origin,
negotiation or signing of this Agreement or in connection with any
transactions contemplated hereby.
(n) Complete Disclosure. To the knowledge of Modavox, no representation
or warranty by Modavox in this Agreement, and no exhibit, schedule,
statement, certificate or other writing furnished to Kino or the
Principals pursuant to this Agreement or in connection with the
transactions contemplated hereby, contains any untrue statement of a
material fact or omits to state a material fact necessary to make
the statements contained herein and therein in the context in which
they were made not misleading.
3.3 CERTIFICATE LEGENDS. Each certificate evidencing the Merger Shares to be
issued pursuant to this Agreement will bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SHARES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
WITH RESPECT TO THE SHARES OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SAID ACT THAT IS THEN APPLICABLE TO THE SHARES, AS
TO WHICH A PRIOR OPINION OF COUNSEL MAY BE REQUIRED BY THE ISSUER OR
THE TRANSFER AGENT.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE FURTHER SUBJECT TO A
STOCK TRANSFER RESTRICTION AGREEMENT BETWEEN KINO AND THE REGISTERED
HOLDER, WHICH IMPOSES SIGNIFICANT RESTRICTIONS ON THE TRANSFER OF
THE SHARES. A COPY OF THAT AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICE OF THE COMPANY.
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ARTICLE 4
COVENANTS PRIOR TO CLOSING
4.1 AFFIRMATIVE COVENANTS OF KINO. Kino covenants and agrees that, from the
date of this Agreement and until the Closing or the date, if any, on which
this Agreement is earlier terminated pursuant to Section 8.1 hereof,
unless Modavox otherwise agrees in writing and except as expressly
contemplated by this Agreement, will, using reasonable, best efforts:
(a) conduct its business and operations only in the ordinary course of
business;
(b) keep in full force and effect its limited liability company
existence and all rights, franchises and proprietary rights relating
or pertaining to Kino and use its reasonable best efforts to cause
its current insurance (or reinsurance) policies not to be canceled
or terminated or any of the coverage thereunder to lapse;
(c) carry on the business in the same manner as presently conducted and
to keep Kino's business organization and properties intact,
including its present business operations, physical facilities,
working conditions and employees and its present relationships with
lessors, licensors, suppliers and customers and others having
business relations with it;
(d) maintain the material assets in good repair, order and condition
(normal wear and tear excepted) consistent with current needs,
replace in accordance with prudent practices its inoperable, worn
out or obsolete assets with assets of good quality consistent with
prudent practices and current needs and, if a casualty, loss or
damage occurs to any of such assets or properties prior to the
Closing Date (whether or not such casualty, loss or damage is
covered by insurance), either repair or replace such damaged
property or use the proceeds of such insurance in such other manner
as mutually agreed upon by Kino and Modavox;
(e) facilitate the continued employment of employees by Modavox after
the Closing;
(f) maintain the books, accounts and records in accordance with past
custom and practice as used in the preparation of Kino's financial
statements;
(g) immediately (once Kino obtains knowledge thereof) inform Modavox in
writing of any material exceptions from the representations and
warranties contained in Article 3 hereof that were not previously
disclosed or any breach of any covenant hereunder by Kino;
22
(h) cooperate with Modavox and cause the conditions to Modavox's
obligations to close to be satisfied (including, without limitation,
the execution and delivery of all agreements contemplated hereunder
to be so executed and delivered and the making and obtaining of all
third party and governmental notices, filings, authorizations,
approvals, consents, releases and terminations);
(i) obtain all third party and governmental approvals and consents
necessary or desirable to consummate the transactions contemplated
hereby;
(j) maintain the existence of and use commercially reasonable efforts to
protect all proprietary rights used in the business;
(k) maintain the existence of and protect all of the governmental
permits, licenses, approvals and other authorizations of the
business;
(l) comply with all applicable laws, ordinances and regulations in the
operation of the business; and
(m) cooperate with Modavox in its investigation of Kino and permit
Modavox and its employees, agents, accounting, legal and other
authorized representatives to (i) have full access to the premises,
books and records of Kino at reasonable hours, (ii) visit and
inspect any of the properties of Kino and (iii) discuss the affairs,
finances and accounts of Kino with the directors, officers,
partners, key employees, key sales representatives, and independent
accountants of Kino.
4.2 NEGATIVE COVENANTS OF KINO. Kino covenants and agrees that, from the date
of this Agreement and until the Closing or the date, if any, on which this
Agreement is earlier terminated pursuant to Section 8.1 hereof, unless
Modavox otherwise agrees in writing and except as expressly contemplated
by this Agreement, will not:
(a) take any action that would require disclosure under the Agreement;
(b) make any loans, enter into any transaction with any insider or make
or grant any increase in any employee's or officer's compensation or
make or grant any increase in any employee benefit plan, incentive
arrangement or other benefit covering any of the employees;
(c) establish or, except in the ordinary course of business and
disclosed in Kino's Exceptions Schedule, contribute to any pension,
retirement, profit sharing or stock bonus plan or multiemployer plan
covering the employees;
(d) except as specifically contemplated by this Agreement, enter into
any contract, agreement or transaction, other than in the ordinary
course of business and at arm's length, with unaffiliated persons;
23
(e) engage in any activity other than in the ordinary course of business
which would accelerate or delay the collection of its accounts or
notes receivable, accelerate or delay the payment of its accounts
payable, delay its capital expenditures, or reduce or otherwise
restrict the amount of inventory on hand;
(f) sell, transfer, contribute, distribute, or otherwise dispose of any
securities or assets, or agree to do any of the foregoing, to or
with any person, other than in the ordinary course of business; or
(g) make, change or revoke any Tax election, adopt or change any method
of accounting, or enter into any agreement regarding Taxes with any
Taxing authority.
4.3 ADDITIONAL COVENANTS OF KINO.
(a) Kino represents and warrants to Modavox that the Board of Directors
of Kino has made such assessments of Kino's value and has taken such
other actions as to satisfy the fiduciary duties of the Board of
Directors that must be satisfied to enable Kino to enter into this
Agreement and to render this Agreement binding upon Kino in
accordance with its terms.
(b) Kino hereby agrees that, prior to the Closing or termination of this
Agreement, it will not, and will not cause or permit any of its
directors, officers, employees, agents or representatives (each a
"Seller Representative"), directly or indirectly, to:
(i) solicit, initiate or encourage (including by way of furnishing
or disclosing non-public information) the making of, or any
inquiries regarding, any Transaction Proposal (as hereinafter
defined),
(ii) engage in negotiations, explore or otherwise engage in
substantive discussions with or furnish any information to any
Person (other than Modavox or its Representatives (as
hereinafter defined)), or enter into any agreement with
respect to any Transaction Proposal, or enter into any
agreement, arrangement or understanding requiring it to
abandon, terminate or fail to consummate the transactions
contemplated by this Agreement, or
(iii) take or approve any actions to facilitate any such activities.
(c) Nothing in this Section 4.3 will:
(i) permit Kino to terminate this Agreement other than pursuant to
Section 8.1 hereof or
(ii) affect any other obligation of Kino under this Agreement.
24
(d) Kino hereby covenants that it will use its best efforts to cause
Kino's net working capital as of the Closing Date to be equal to or
exceed its net working capital as of the close of business as of the
Signature Date.
4.4 COVENANTS OF MODAVOX. Prior to the Closing, Modavox will:
(a) promptly (once it obtains knowledge thereof) inform Kino in writing
of any exceptions from the representations and warranties contained
in Article 3 not previously disclosed or any breach of any covenant
hereunder by Modavox; and
(b) cooperate with Kino and use commercially reasonable efforts to cause
the conditions to Kino' obligations to close to be satisfied
(including, without limitation, the execution and delivery of all
agreements contemplated hereunder to be so executed and delivered
and the making and obtaining of all third party and governmental
filings, authorizations, approvals, consents, releases and
terminations).
4.5 MUTUAL COVENANTS OF THE PARTIES. The Parties hereto agree that:
(a) Subject to the terms and conditions of this Agreement, each Party
will use commercially reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations
to consummate the transactions contemplated by this Agreement. In
connection with, and without limiting the foregoing, each Party will
(i) use commercially reasonable efforts to take all action necessary
to render true and correct as of the Closing Date its
representations and warranties contained in this Agreement, (ii)
refrain from taking any action that would render any such
representation or warranty untrue or incorrect as of such time,
(iii) perform or cause to be satisfied each agreement, covenant or
condition to be performed or satisfied by it and (iv) use
commercially reasonable efforts to satisfy the other Party's
conditions to closing as set forth in Section 6.2 with respect to
Modavox and in Section 6.1 with respect to Kino. Kino and Modavox
will each furnish to one another and to one another's counsel all
such information as may be required to accomplish the foregoing
actions.
(b) After signing this Agreement, Kino will give Modavox and any
Representatives full access, during normal business hours, to all of
the properties, books, contracts, commitments and records relating
to such Company, provided that such access will not unreasonably
interfere with the normal operations of Kino. Further, Kino will
furnish to Modavox and its officers, directors, employees, agents
and/or representatives (collectively, the "Representatives") all
such information concerning such Company as Modavox may reasonably
request; provided, however, that any furnishing of such information
pursuant hereto or any investigation by Modavox will not affect
Modavox's right to rely on the representations, warranties,
agreements and covenants made by Kino in this Agreement.
25
(c) Each Party will cooperate with one another (i) in connection with
the preparation of any disclosure document filed after the date
hereof pursuant to the Securities Act or any state securities law
(each a "Disclosure Document"), (ii) in determining whether any
other action by or in respect of, or filing with, any governmental
entity or any department, agency or political subdivision thereof,
or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts in connection with
the consummation of the transactions contemplated by this Agreement
and (iii) in timely seeking to obtain any such actions, consents,
approvals or waivers and timely making any such filings, and
furnishing information required in connection therewith and/or with
any Disclosure Document.
(d) Kino, on the one hand, and Modavox, on the other hand, will promptly
notify the other of:
(i) any notice or other communication from any person alleging
that the consent of such person is or may be required in
connection with the transactions contemplated by this
Agreement;
(ii) any notice or other communication from any governmental entity
or any department, agency or political subdivision thereof in
connection with the transactions contemplated by this
Agreement;
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against,
relating to or involving or otherwise affecting Kino, on the
one hand, or Modavox, on the other hand, which relate to the
consummation of the transactions contemplated by this
Agreement; and
(iv) any action, event or occurrence that would constitute a breach
of any representation, warranty, covenant or agreement of such
Person set forth in this Agreement.
(e) This Agreement is intended to constitute a "plan of reorganization"
within the meaning of the income tax regulations promulgated under
the Code. From and after the date of this Agreement and until the
Effective Time, each party hereto will use its reasonable best
efforts to cause the Merger to qualify, and will not knowingly take
any action, cause any action to be taken, fail to take any action or
cause any action to fail to be taken which action or failure to act
could prevent the Merger from qualifying as a reorganization under
the provisions of Section 368(a) of the Code. Following the
Effective Time, neither Modavox nor any of its affiliates will
knowingly take any action, cause any action to be taken, fail to
take any action or cause any action to fail to be taken, which
action or failure to act could cause the Merger to fail to qualify
as a reorganization under Section 368(a) of the Code.
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ARTICLE 5
POST CLOSING COVENANTS
5.1 CONFIDENTIALITY. Kino will not disseminate any press release or
announcement concerning the transactions contemplated by this Agreement,
or identifying the parties, without the prior written consent of Modavox.
Kino will maintain the confidentiality of this Agreement, and all
discussions and negotiations regarding the Merger.
5.2 EMPLOYEE MATTERS. The parties agree that Modavox will be obligated to
continue the employment of any employees of Kino, except as expressly
provided otherwise in this Agreement. Employees of Kino that Modavox
retains following the Closing will receive compensation or credit by
Modavox for benefits earned while employed by Kino.
5.3 BONUS. The Chairman of Modavox will receive a bonus of seventy-five
thousand dollars ($75,000) for effectuating the Merger.
ARTICLE 6
CONDITIONS TO MERGER
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The respective
obligation of each Party to effect the Merger will be subject to the
satisfaction on or prior to the Closing Date of the following conditions:
(a) Accuracy of Representations and Warranties. The representations and
warranties of each of the other Parties contained herein were true
and correct in all material respects when made and, except for
changes contemplated by this Agreement and to the extent such
representations and warranties speak as of an earlier date, are true
and correct in all material respects as of the Closing Date as
though made on that date.
(b) Performance of Agreements. Each of the other Parties will have
performed in all material respects all obligations and agreements
and complied in all material respects with all covenants contained
in this Agreement to be performed and complied with by them at or
prior to the Closing.
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(c) Compliance Certificate. The chief executive officer of each of the
other Parties will have delivered to the receiving Party a
certificate, dated the Closing Date, Substantially in form of
Exhibit 6.1(c) certifying that (i) the representations and
warranties of such Party contained herein were true and correct in
all material respects when made and, except for changes contemplated
by this Agreement and to the extent such representations and
warranties speak as of an earlier date, are true and correct in all
material respects as of the Closing Date as though made on that
date, and (ii) the covenants and agreements to be performed and
complied with by such Party at or prior to the Closing have been
fulfilled. (d) Absence of Objection. There is no pending or
threatened investigation, action, suit or proceeding challenging the
transaction by any body or agency of the federal, state or local
government or by any third party, and the consummation of the
transaction has not been enjoined by a court of competent
jurisdiction as of the Closing Date and any applicable waiting
period under any applicable federal law has expired.
(e) Approval of Documentation. The form and substance of all
certificates, instruments and other documents delivered or to be
delivered under this Agreement is reasonably satisfactory.
(f) Consents. All requisite consents and approvals of all lenders,
lessors and other third parties whose consent or approval is
required to consummate the transactions contemplated by this
Agreement have been received.
(g) Operation of Businesses. Since the Balance Sheet Date, each of the
other Parties has been operated in the ordinary course consistent
with past practices.
(h) Changes. Since the Balance Sheet Date, there has not been any
material adverse change in the financial condition, results of
operations, prospects, properties or business of the each of the
other Parties.
(i) Approvals. This Agreement and the Merger is approved and adopted by
the affirmative vote of the holders of the requisite number of
outstanding membership interests of Kino, and Modavox's Board of
Directors.
(j) Merger Shares. Modavox will have delivered the Merger Shares to
Kino.
(k) Employment Agreements. Employment Agreements with ▇▇▇▇▇ ▇. ▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ in the
form attached hereto as Exhibits 6.1(k-1), 6.1(k-2), 6.1(k-3),
6.1(k-4) and, 6.1(k-5), respectively, have been approved by
Modavox's Board of Directors, executed and received.
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(l) Consulting Agreement. A Consulting Agreement with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
in the form attached hereto as Exhibit 6.1(l) has been approved by
Modavox's Board of Directors, executed and received.
(m) Board of Directors. Kino will have the right to appoint two
additional members to Modavox's Board of Directors in addition to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇.
(n) Escrow Agreement. The Escrow Agreement with the Escrow Agent and the
Stockholder Representative in substantially the form attached hereto
as Exhibit 2.3 has been approved by Modavox's Board of Directors,
executed and received.
(o) Amended and Restated Bylaws. Amended and Restated Bylaws in the form
attached hereto as Exhibit 6.1(o), including among other provisions
that the Surviving Corporation's Vice Chairman may convene meetings
of the Board of Directors, has been approved by Modavox's Board of
Directors and duly adopted.
(p) Certificates of Designation. Certificates of Designation in the form
attached hereto as Exhibit 2.1(p-1) and Exhibit 2.1(p-2) have been
approved by Modavox's Board of Directors and duly adopted.
ARTICLE 7
INDEMNIFICATION
7.1 TWO YEAR SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties in this Agreement, and all statements
contained in this Agreement, any certificate, financial statement or
report or other document delivered pursuant to this Agreement or in
connection with the transactions contemplated hereby (collectively, the
"Acquisition Documents"), will survive the signing and delivery of this
Agreement and the Closing hereunder for a period of two years following
the Closing Date, notwithstanding any investigation made at any time by or
on behalf of any party, provided that the representations and warranties
contained in Section 3.1(g) will survive the applicable statute of
limitations with respect to the Tax liabilities in question (giving effect
to any waiver, mitigation or extension thereof). If written notice of a
specific claim made in good faith has been given pursuant to Section
7.4(b) on or prior to such date, then the relevant representations and
warranties will survive as to such claim, until the claim has been finally
resolved.
7.2 INDEMNIFICATION BY MODAVOX. Except as otherwise limited by this Article,
Kino and its officers, directors, agents and successors and permitted
assigns will be indemnified and held harmless by Modavox for any and all
liabilities, losses, damages, claims, costs and expenses, interest,
awards, judgments, and penalties (including reasonable attorneys' and
consultants' fees and expenses) actually suffered or incurred by them
("Kino's Losses") arising out of or resulting from:
29
(a) the inaccuracy or breach of any representation or warranty by
Modavox contained herein or in any document delivered by Modavox
pursuant to this Agreement;
(b) the breach of any covenant or agreement by Modavox, contained herein
or in any document delivered by Modavox pursuant to this Agreement;
(c) the execution of the Promissory Notes in favor of Modavox by the
individuals identified on Schedule 7.2(c);
(d) the agreement to issue Common Stock registered on Form S-8 to the
law firm of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ for services rendered;
(e) the departures of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇ as employees of
Modavox; or
(f) payroll tax liabilities arising prior to October 18, 2005.
7.3 INDEMNIFICATION BY KINO. Except as otherwise limited by this Article,
Modavox and its officers, directors, agents and successors and permitted
assigns will be indemnified and held harmless by Kino for any and all
liabilities, losses, damages, claims, costs and expenses, interest,
awards, judgments, and penalties (including reasonable attorneys' and
consultants' fees and expenses) actually suffered or incurred by them
("Modavox's Losses") arising out of or resulting from:
(a) the inaccuracy or breach of any representation or warranty by Kino
contained herein or in any document delivered by Kino pursuant to
this Agreement; or
(b) the breach of any covenant or agreement by Kino, contained herein or
in any document delivered by Kino pursuant to this Agreement;
7.4 GENERAL INDEMNIFICATION PROVISIONS.
(a) Definitions. For the purposes of this Agreement, the term
"Indemnitee" will refer to the person(s) or entity(ies) indemnified,
or entitled, or claiming to be entitled, to be indemnified, pursuant
to the provisions of Sections 7.2, the term "Indemnitor" will refer
to the person(s) or entity(ies) having the obligation to indemnify
pursuant to such provisions, and "Losses" will refer to Kino's
Losses or Modavox's Losses, as the case may be.
(b) Notice. The Indemnitee will promptly give the Indemnitor notice of
any matter which the Indemnitee has determined has given or could
give rise to a right of indemnification under this Agreement,
stating the amount of the Losses, if known, the method of
computation thereof and the basis for the claim, all with reasonable
particularity. Failure to give timely notice of a matter which may
give rise to an indemnification claim will not affect the rights of
the Indemnitee to collect such claim from the Indemnitor so long as
such failure to so notify does not materially adversely affect the
Indemnitor's ability to defend such claim against a third party.
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(c) Third Party Claims. The obligations and liabilities of the
Indemnitor with respect to Losses arising from claims of any third
party that are subject to the indemnification provided for in this
Article 7 ("Third-Party Claims") will be governed by the following
additional terms and conditions:
(i) if the Indemnitee will receive notice of any Third-Party
Claim, the Indemnitee will give the Indemnitor prompt notice
of such Third-Party Claim and will permit the Indemnitor, at
its option, to assume and control the defense and/or
management of such Third-Party Claim at the Indemnitor's
expense and through counsel of its choice if the Indemnitor
gives prompt notice of its intention to do so to the
Indemnitee and does so within a reasonable time thereafter;
(ii) if the Indemnitor exercises its right to undertake the defense
and/or management of any such Third-Party Claim, the
Indemnitee will cooperate with the Indemnitor in such defense
and/or management and make available to the Indemnitor all
witnesses, pertinent records, materials and information in the
Indemnitee's possession or under its control relating thereto
as is reasonably required by the Indemnitor;
(iii) if the Indemnitor does not exercise its right to undertake the
defense and/or management of any Third-Party Claim as provided
above, the Indemnitee may, directly or indirectly, conduct the
defense and/or management of any such Third-Party Claim in any
manner it reasonably may deem appropriate and at the expense
of the Indemnitor, and the Indemnitor will cooperate with the
Indemnitee in such defense and/or management and make
available to the Indemnitee all witnesses, pertinent records,
materials and information in the Indemnitor's possession or
under its control relating thereto as is reasonably required
by the Indemnitee;
(iv) the Indemnitor will not consent to the entry of any judgment
or enter into any settlement with respect to a Third-Party
Claim (x) without the prior written consent of the Indemnitee
(not to be unreasonably withheld), unless the judgment or
proposed settlement involves only the payment of money
damages, does not impose an injunction or other equitable
relief upon the Indemnitee and could not otherwise reasonably
be expected to have a material adverse effect on the
Indemnitee and (y) unless the consent or settlement includes
as an unconditional term thereof the giving by the claimant or
plaintiff to the Indemnitee on an unconditional release from
all liability in respect of the Third-Party Claim;
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(v) the Indemnitee will not consent to the entry of any judgment
or enter into any settlement with respect to a Third-Party
Claim without the prior written consent of the Indemnitor (not
to be unreasonably withheld), unless the Indemnitor fails to
assume the defense and/or management of the Third-Party Claim
in accordance with this Section 7.5(c); and
(vi) if there is a reasonable probability that a Third-Party Claim
may materially and adversely affect the Indemnitee other than
as a result of money damages or other monetary payments, the
Indemnitee will have the right, at its own cost and expense,
to participate in the defense of the Third-Party Claim.
(d) Effect of Materiality Qualifiers. Although a representation,
warranty or covenant of any of the parties to this Agreement may not
be deemed breached, inaccurate or in default unless or until a
certain standard as to "material", "materiality", or "material
adverse effect" has been met, for purposes of calculating Losses in
connection with this Article 7, once such materiality or material
adverse effect standard has been met, the Indemnitee will be
entitled to indemnification for all Losses arising out of or
resulting from such breach, inaccuracy or default of any such
representation, warranty, or covenant without giving effect to any
such standard.
ARTICLE 8
TERMINATION
8.1 TERMINATION. Notwithstanding anything herein to the contrary, this
Agreement may be terminated at any time: (i) on or prior to the Closing
Date by mutual consent of Modavox and Kino; or (ii) by either Modavox or
any of Kino if the Closing will not have taken place within sixty (60)
days of the Signature Date, unless the party desiring to terminate as
above provided is in default hereunder.
8.2 EFFECT OF TERMINATION. If this Agreement is validly terminated pursuant to
this Article 8, there will be no further liability or obligation on the
part of the parties hereto (or any of their respective officers,
directors, employees, agents or other representatives); provided, however,
that if this Agreement is terminated due to a material breach by one of
the parties, the breaching party(ies) will remain liable to the
non-breaching parties for such breach existing at the time of such
termination and the non-breaching parties may seek any remedies, including
damages and fees of attorneys, against the breaching party(ies) with
respect to such breach as are provided in this Agreement or as are
otherwise available at law or in equity.
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ARTICLE 9
MISCELLANEOUS
9.1 NOTICE. All notices and other communications required or permitted under
this Agreement will be delivered to the parties at the address set forth
below their respective signature blocks, or at such other address that
they hereafter designate by notice to all other parties in accordance with
this Section 9.1. All notices and communications will be deemed to be
received in accordance with the following: (i) in the case of personal
delivery, on the date of such delivery; (ii) in the case of facsimile
transmission, on the date on which the sender receives confirmation by
facsimile transmission that such notice was received by the addressee,
provided that a copy of such transmission is additionally sent by mail as
set forth in (iv) below; (iii) in the case of overnight air courier, on
the second business day following the day sent, with receipt confirmed by
the courier; and (iv) in the case of mailing by first class certified
mail, postage prepaid, return receipt requested, on the fifth business day
following such mailing.
9.2 ASSIGNMENT. This Agreement and the various rights and obligations arising
hereunder will inure to the benefit of and be binding upon Kino, their
successors and permitted assigns, and Modavox and its successors and
permitted assigns. Neither this Agreement nor any of the rights,
interests, or obligations hereunder will be transferred or assigned by
Kino, including but not limited to assignment by operation of law or by
change of control of Kino, without the prior written consent of the other
parties.
9.3 EXPENSES. Modavox and Kino will each bear and pay all costs and expenses
respectively incurred by each of them on their behalf in connection with
this Agreement, including fees and expenses of their own financial
consultants, accountants and legal counsel. Modavox will pay all
applicable sales, use, excise, transfer, documentary and any other similar
taxes arising out of this Agreement, or in relation to the transactions
referenced herein.
9.4 WAIVER; CONSENT. This Agreement may not be changed, amended, terminated,
augmented, rescinded, or discharged (other than by performance), in whole
or in part, except by a writing signed by the parties hereto, and no
waiver of any of the provisions or conditions of this Agreement or any of
the rights of a party will be effective or binding unless such waiver will
be in writing and signed by the party claimed to have given or consented
thereto. Except to the extent that a party may have otherwise agreed in
writing, no waiver by that party of any condition of this Agreement or
breach by the other party of any of its obligations or representations
hereunder or thereunder will be deemed to be a waiver of any other
condition or subsequent or prior breach of the same or any other
obligation or representation by the other party.
33
9.5 COUNTERPARTS. This Agreement may be signed simultaneously in multiple
counterparts, each of which will be deemed an original, but all of which
taken together will constitute one and the same instrument.
9.6 SEVERABILITY. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision will be excluded from
this Agreement to the extent of its unenforceability, and the balance of
the Agreement will be interpreted as if such unenforceable provision (to
the extent of its unenforceability) was so excluded, but will otherwise be
enforceable in accordance with its terms.
9.7 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provisions of this Agreement
are intended, nor will be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, stockholder, partner or employee of any party or any
other person or entity unless specifically provided otherwise herein, and,
except as so provided, all provisions hereof will be personal solely
between the parties to this Agreement.
9.8 COOPERATION AND RECORDS RETENTION. Kino and Modavox will (i) each provide
the other with such assistance as may reasonably be requested by them in
connection with the preparation of any Tax Returns, or in connection with
any audit or other examination by any taxing authority or any judicial or
administrative proceedings relating to liability for Taxes, (ii) each
retain and provide the other, with any records or other information which
may be relevant to any such Tax Return, audit or examination, proceeding
or determination, and (iii) each provide the other with any final
determination of any such audit or examination, proceeding or
determination that affects any amount required to be shown on any Tax
Return of the other for any period. Without limiting the generality of the
foregoing, the Principals and Modavox will retain, until the applicable
statute of limitations (including any extensions) have expired, copies of
all Tax Returns, supporting work schedules and other records or
information which may be relevant to such Tax Returns for all tax periods
or portions thereof ending before or including the Closing Date and will
not destroy or otherwise dispose of any such records without first
providing the other party with a reasonable opportunity to review and copy
the same. Modavox will keep the original copies of the records at its
facilities in Delaware and elsewhere, if applicable, and, at the
Principals' expense, will provide copies of the Records to the Principals
upon the Principals' request. Any information obtained under this Section
9.8 will be kept confidential except as may be otherwise necessary in
connection with the filing of Tax returns or claims for refund or in
conducting an audit or other proceeding.
9.9 COMPULSORY ARBITRATION AND LEGAL FEES. Any controversy, claim and/or
dispute arising out of or relating to this Agreement or the breach hereof
or subject matter hereof (including any action in tort) will be finally
and settled by arbitration in Phoenix, Arizona, in accordance with
then-existing Commercial Arbitration Rules of the American Arbitration
Association (the "AAA"), and judgment upon the award rendered by the
arbitrators may be entered in any court having applicable jurisdiction.
Written notice of demand for arbitration will be given to the other
parties and to the AAA within six (6) months after the controversy, claim
or dispute has arisen or be barred, and in no event after the date when
the institution of court proceedings based on such dispute would be barred
by the applicable of statute of limitations. Controversies, claims and/or
34
disputes will be resolved by one arbitrator selected by the mutual
agreement of the parties or, failing that agreement within forty-five (45)
days after written notice demanding arbitration, by the AAA. There will be
limited discovery prior to the arbitration hearing as follows: (i)
exchange of witness lists and copies of documentary evidence and documents
related to or arising out of the issues to be arbitrated, and (ii)
depositions of all party witnesses. Depositions will be conducted in
accordance with the rules or code of Civil Procedure of the jurisdiction
in which the arbitration is conducted, and a court reporter will record
all hearings, with such record constituting the official transcript of
such proceedings. All decisions of the arbitrator will be in writing, and
the arbitrator will provide reasons for the decision. Each Party will bear
its own respective attorneys' fees, costs and disbursements in connection
with any dispute or arbitration.
9.10 SPECIFIC PERFORMANCE. Notwithstanding Section 9.9, the parties agree that
irreparable damage would occur if any provision of this Agreement is not
performed in accordance with the terms hereof, and that Kino and Modavox
will be permitted to access the court system to obtain injunctive relief
and/or specific performance of the terms hereof.
9.11 FURTHER ACTION. Each of the parties will use all reasonable efforts to
take, or cause to be taken, all appropriate action, do or cause to be done
all things reasonably necessary, proper or advisable under applicable
laws, and sign and deliver such documents and other papers, as may be
reasonably required to carry out the provisions of this Agreement, and
consummate and make effective the transactions contemplated by this
Agreement.
9.12 INTERPRETATION. As used in this Agreement, the term "person" will mean and
include any individual, partnership, joint venture, corporation, trust,
unincorporated organization, and government or other department or agency
thereof. Except to the extent the context otherwise requires: (i) any
reference to an Article, Section, Schedule or Exhibit is a reference to an
article, section, schedule or exhibit of this Agreement; (ii) any
reference to a section or a clause is, unless otherwise stated, a
reference to a section or a clause of the Section or subsection in which
the reference appears; (iii) the words "hereof", "herein", "hereto" and
the like mean and refer to this Agreement as a whole, and not merely to
the specific Article, Section, subsection, paragraph or clause in which
the respective word appears; (iv) the meaning of defined terms will be
equally applicable to both the singular and plural forms of the terms
defined; (v) the words "including", "includes" and "include" will be
35
deemed to always be followed by the words "without limitation"; (vi)
references to agreements and other contractual instruments will be deemed
to include all subsequent amendments and other modifications thereto;
(vii) references to statutes or regulations are to be construed as
including all statutory and regulatory provisions consolidating, amending
or replacing the statute or regulation referred to; (viii) any table of
contents, captions and headings are for convenience of reference only, and
will not affect the construction of this Agreement; (ix) in the
computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including"; the words "to" and
"until" each mean "to but excluding"; and the word "through" means "to and
including"; and (x) references to days will mean calendar days. No
provision of this Agreement will be construed against or interpreted to
the disadvantage of any of the parties by any court or other authority by
reason of that party having drafted or proposed such provision.
9.13 APPLICABLE LAW. This Agreement will, in all respects, be governed by the
laws of the state of Delaware applicable to all agreements signed and to
be wholly performed within the state of Delaware. If one or more
provisions of this Agreement are held to be unenforceable under applicable
law, such provision will be excluded from this Agreement to the extent of
its unenforceability, and the balance of the Agreement will be interpreted
as if such unenforceable provision (to the extent of its unenforceability)
was so excluded, but will otherwise be enforceable in accordance with its
terms.
9.14 SURVIVAL. The representations, warranties and covenants of the parties
hereto will survive the Closing or the termination of this Agreement if
the Closing does not occur, subject to the express limitations on
survivability contained in this Agreement.
9.15 ENTIRE AGREEMENT. This Agreement will be deemed to include the exhibits
and schedules referred to herein. This Agreement, together with the
documents referred to herein, and the documents to be signed and delivered
hereunder contemporaneously with the Closing Date embody the entire
agreement and understanding of the parties with respect to the subject
matter hereof, and supersede and extinguish all prior agreements, drafts,
representations and understandings, oral or written, relative to such
subject matter. Each of the parties hereby acknowledges that no
representations, inducements, promises or agreements, verbally or
otherwise, have been made by any of the parties, or anyone acting on
behalf of any of the parties, which are not embodied in this Agreement,
and that no other agreement, statement or promise not contained in this
Agreement will be valid or binding. Each of the parties represents and
warrants that it has fully familiarized itself with this Agreement, and
that such party has been fully authorized to sign this Agreement, and all
related documents. The parties agree that this Agreement will only be
binding when signed by the parties in the blanks immediately below. If the
pages of this Agreement are initialed, such initialing will be solely for
the purpose of identification. If initialing is on some, but not all, of
the pages of this Agreement, that absence of initialing will not affect
the validity of this Agreement, to the extent it is signed in the blanks
immediately below.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
and delivered as of the latest date this Agreement is executed by the
signatories, as set forth below.
Modavox, Inc. Kino Interactive, L.L.C.
By: /s/ ▇▇▇▇▇ ▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------- ---------------------------------
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Chief Executive Officer Managing Member
Date: December 5, 2005 Date: December 5, 2005
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
37