AMENDED AND RESTATED
PLAN OF REORGANIZATION
AND STOCK PURCHASE AGREEMENT
BY AND AMONG
MODAVOX, INC.
WTR ACQUISITION, INC.
AND
WORLD TALK RADIO, INC.
MARCH 1 ,2007
PLAN OF REORGANIZATION
AND
STOCK PURCHASE AGREEMENT
This Amended and Restated Plan of Reorganization and Stock Purchase
Agreement ("Agreement") is entered into as of this 1st day of March, 2007 by and
among Modavox, Inc. ("Buyer"), a Delaware corporation; World Talk Radio, Inc.
("Seller"), a California corporation; and WTR Acquisition, Inc. ("Newco"), an
Arizona corporation. This Agreement amends and restates in its entirety that
certain Plan of Reorganization and Stock Purchase Agreement between Buyer,
Seller and Newco dated February 16, 2007. Buyer, Newco and Seller are sometimes
referred to herein individually as a "Party" or collectively as the "Parties."
RECITALS
A. Seller operates an Internet talk station, conducts activities in
related progressive media, and provides worldwide programming through an
expanding distribution network (the "Business").
B. Seller has transferred, all of the assets and operations of the
Business and substantially all of the assets of Seller to Newco.
C. Buyer will acquire 100% of the stock of Newco from Seller at the
Closing, all upon the terms and subject to the conditions and provisions set
forth in this Agreement.
D. Except as specifically provided in this Agreement, neither Buyer nor
Newco will assume any Liabilities, actual or contingent, of either Seller or the
Business.
AGREEMENT
In consideration of the Recitals, promises, representations, warranties
and covenants contained in this Agreement, the parties agree as follows.
1. Definitions.
"ACQUIRED ASSETS" shall mean the assets used in, or held for use in,
the Business, excluding Cash (except that cash deposits and pre-pays from
customers for work yet to be done post-Closing by Newco will be a transferred
Acquired Asset), including all of the following:
TANGIBLE ASSETS. All of the tangible assets (the "Tangible
Assets"), as described in Exhibit A.
INVENTORY. All of the inventories and supplies of the Business
as of the Closing Date (the "Inventory").
ACCOUNTS RECEIVABLE. All accounts receivable of as of the
Closing Date (the "Accounts Receivable").
CONTRACTS. All of the rights in, to and under any and all
contracts of the Business (the "Assumed Contracts"). To the extent that
any Contracts are not assignable as provided in this Agreement without
the consent of another party, this Agreement shall not constitute an
assignment or an attempted assignment thereof if such assignment or
attempted assignment would constitute a breach thereof. Seller agrees
to obtain the consent, in form and substance reasonably satisfactory to
Buyer, of such other party to the assignment of any such Assumed
Contract to the Business, as owned by Buyer, in all cases in which such
consent is or may be required for such assignment.
INTELLECTUAL PROPERTY. All rights in and to all Intellectual
Property as defined below.
MISCELLANEOUS. Any and all approvals, permits, licenses,
orders, registrations, certificates, variances and similar rights
obtained from governments and governmental agencies related to the
Business. Any books and records relating to the Business, the Acquired
Assets or Assumed Liabilities.
"BASIS" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act or transaction that forms or could form the
basis for any specified consequence.
"CASH" means cash and cash equivalents.
"CLOSING" has the meaning set forth in Section 2.6 below.
"CLOSING DATE" has the meaning set forth in Section 2.6 below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"DAMAGES" has the meaning set forth in Section 8.1 below.
"EMPLOYEE(S)" means the individuals who were employed directly
or indirectly by Seller or Newco prior to the Closing.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" (as
such term is defined in ERISA ss.3(3)) and any other employee benefit plan,
program or arrangement of any kind.
"ENCUMBRANCE" means any mortgage, pledge, lien, encumbrance,
charge or other security interest, other than (a) mechanics', materialmen's, and
similar liens, (b) liens for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"EXCLUDED ASSETS" means any asset of Seller listed as an
Excluded Asset on Exhibit A.
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"INTELLECTUAL PROPERTY" means any and all interests in and to
(a) all inventions (whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereto, and all patents, patent
applications and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions and reexaminations
thereof, (b) the World Talk Radio name and all trademarks, service marks, trade
dress, logos, trade names and corporate names, together with all translations,
adaptations, derivations and combinations thereof, and including all goodwill
associated therewith, and all applications, registrations and renewals in
connection therewith, (c) all copyrightable works, all copyrights and all
applications, registrations, and renewals in connection therewith, (d) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing, production and
research processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information and
business and marketing plans and proposals), (e) all computer software,
including software, and any and all proprietary rights thereto, (f) all other
proprietary rights, (g) all copies and tangible embodiments of the foregoing (in
whatever form or medium), (h) the website having the web address of World Talk
▇▇▇▇▇.▇▇▇, (i) all office and studio phone and fax numbers, (j) active and
conceptual work projects, new project ideas conceived or in process, ideas and
concepts relating to operations marketing and management, and (k) goodwill
associated with all of such intellectual property.
"KNOWLEDGE"--an individual will be deemed to have Knowledge of
a particular fact or other matter if:
(a) that individual is actually aware of that fact or matter;
or
(b) a prudent individual could be expected to discover or
otherwise become aware of that fact or matter in the course of
conducting a reasonably comprehensive investigation regarding the
accuracy of any representation or warranty contained in this Agreement.
A Person (other than an individual) will be deemed to have Knowledge of
a particular fact or other matter if any individual who is serving, or who has
at any time served, as a member, manager, director, officer, partner, executor
or trustee of that Person (or in any similar capacity) has, or at any time had,
Knowledge of that fact or other matter (as set forth in (a) and (b) above), and
any such individual (and any individual party to this Agreement) will be deemed
to have conducted a reasonably comprehensive investigation regarding the
accuracy of the representations and warranties made herein by that Person or
individual.
"LIABILITIES." All obligations of Seller or Newco under the contracts,
leases, licenses, and other arrangements referred to in the definition of
Acquired Assets, including (i) obligations of Seller or Newco to pay any
Employee expenses such as salaries, wages, benefits, withholding, social
security or unemployment taxes; (ii) any long or short-term debt of Seller or
Newco (including any obligations to pay for Trade Accounts Payable incurred
prior to the Closing Date); (iii) any Liability of Seller or Newco, any other
Person for Taxes, (iv) any obligation of Seller or Newco to indemnify any one
including by reason of the fact that such Person was a director, manager,
officer, shareholder, Employee or agent of Seller or Newco; (v) any Liability of
Seller or Newco for costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby and (vi) any Liability or
obligation of Seller or Newco under this Agreement (or under any side agreement
between Seller on the one hand and Buyer on the other hand entered into on or
after the date of this Agreement).
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"LIABILITY" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated and whether due or to become
due), including any liability for Taxes.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of
business in the Business consistent with past custom and practice of Seller.
"PERSON" means an individual, corporation, partnership or
limited liability company or any other legal entity or organization.
"PURCHASE PRICE" has the meaning set forth in Section 2.4
below.
"SEC" means the U.S. Securities and Exchange Commission.
"TAX" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss.59A),
customs duties, membership interests, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated or other tax of any kind whatsoever, including any interest,
penalty or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"TRADE ACCOUNTS PAYABLE" means the accounts payable arising
from the Seller's regular historical suppliers of services and materials to
customers of the Business.
2. BASIC TRANSACTION.
2.1 Reorganization of Seller. Subject to the terms and conditions of
this Agreement, Seller has transferred to Newco, free and clear of all
Encumbrances, all of the Acquired Assets, but not the Excluded Assets, in
exchange for 100% of the common stock of Newco.
2.2 Purchase and Sale of Stock. On the Closing Date, and subject to the
terms and conditions of this Agreement, Buyer agrees to purchase from Seller,
free and clear of all Encumbrances, all of the issued and outstanding common
stock of Newco, and Seller agrees to sell, transfer, convey, assign and deliver
to Buyer, all of such common stock for the Purchase Price, described in Section
2.4.
2.3 No Assumption of Liabilities. Neither Buyer nor Newco will assume
or have any responsibility with respect to any obligation or any of the
Liabilities of either Seller or the Business except for any Liability arising
after the Closing under contracts of the Business.
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2.4 Purchase Price. The total purchase price (the "Purchase Price")
will be 1,000,000 shares of Buyer's newly issued common stock ("Common Stock").
Buyer agrees to issue a total of 900,000 shares to Seller at the Closing. The
remaining 100,000 shares of Common Stock shall be held back by Buyer for one
year following the Closing to satisfy any obligations of Seller pursuant to
Section 8.
2.5 Name Change. Within five business days of the Closing Date, unless
extended in the sole discretion of the Buyer, Seller agrees to file an amendment
to its Articles of Incorporation changing Seller's name to a name that does not
include "World Talk Radio."
2.6 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place on the business day following the
satisfaction or waiver of all conditions to the obligations of the parties to
consummate the transactions contemplated hereby (other than conditions with
respect to actions the respective Parties will take at the Closing itself) or
such other date as the parties may mutually determine (the "Closing Date")
provided, however, that the Closing Date shall be no later than March 15, 2007.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and warrants to
Buyer that the statements contained in this Section 3 are correct and complete
with respect to Seller and the Business as of the date of this Agreement and
will be correct and complete with respect to Newco and the Business as of the
Closing Date. The representations and warranties will apply to Newco as though
made through the Closing Date, with the Closing Date substituted for the date of
this Agreement throughout this Section 3, and the name Newco substituted for
Seller throughout this Section 3 except in instances which clearly are intended
to apply only to Seller. Seller shall make and be responsible for all
representations and warranties relating to Newco.
3.1 Organization of Seller and Newco. Seller is a corporation duly
organized, validly existing and in good standing under the laws of California
Newco is a corporation duly organized, validly existing and in good standing
under the laws of Arizona.
3.2 Authorization of Transaction. Seller has full corporate power and
authority and has obtained all corporate approvals and consents to execute and
deliver this Agreement and to perform its obligations hereunder. Newco has full
corporate power and authority and has obtained all corporate approvals and
consents to execute and deliver this Agreement and to operate the Business after
the Closing. This Agreement constitutes the valid and legally binding obligation
of Seller, enforceable in accordance with its terms and conditions, subject to
applicable bankruptcy, insolvency, reorganization and other similar laws
affecting the enforceability of creditors' rights generally, general equitable
principles and the discretion of courts in granting equitable remedies.
3.3 Noncontravention. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby will (i)
require any consent from or violate any regulation, ruling or other restriction
of any government or agency to which Seller is subject; (ii) conflict with any
provision of the articles of incorporation or bylaws of Newco or the Articles of
Incorporation or Bylaws of Seller; or (iii) conflict with, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease or other
arrangement to which Seller is a party or by which it is bound or to which any
of its assets is subject (or result in the imposition of any Encumbrance upon
any of its assets).
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3.4 No Broker. No broker or finder has acted for Seller in any manner
in connection with this Agreement and the consummation of the transactions
contemplated hereby.
3.5 Title to Assets. Seller has, and Newco will have as of the Closing,
good and marketable title to, or a valid leasehold interest in all of the
Acquired Assets, free and clear of any Encumbrances or restriction on transfer.
3.6 Revenues. Gross revenues of the Business during calendar year 2006
totaled at least $250,000. Attached hereto as Exhibit B is a list of revenues of
the Business, by customer, during the 2006 calendar year.
3.7 Material Changes. Since the January 1, 2007, there have not been
any material adverse changes in the Business, financial condition, operations,
results of operations or future prospects of Seller and none are reasonably
expected.
3.8 Undisclosed Liabilities. Seller has no Liability (and to Seller's
Knowledge there is no Basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand against it giving
rise to any Liability), except for Liabilities which have arisen in the Ordinary
Course of Business (none of which results from, arises out of, relates to, is in
the nature of, or was caused by any breach of contract, breach of warranty,
tort, infringement, or violation of law).
3.9 LEGAL COMPLIANCE.
(a) To Seller's Knowledge, Seller has complied with all
applicable laws and no action, suit, or other proceeding, including an
investigation, has been filed or commenced against it alleging any
failure so to comply.
(b) Seller has not been and is not currently involved in any
litigation. Seller is not subject to any outstanding injunction,
judgment, order, decree, ruling or charge, and is not a party to nor
has it been threatened to be made a party to any action, suit
proceeding, hearing or investigation of, in, or before any court or
administrative agency of any federal, state, local or foreign
jurisdiction, or before any arbitrator.
3.10 TAX MATTERS.
(a) Seller has filed all Tax Returns that it was required to
file. All such Tax Returns were correct and complete in all respects.
All Taxes owed by the Seller (whether or not shown on any Tax Return)
have been paid. The Seller is not currently the beneficiary of any
extension of time within which to file any Tax Return. There are no
Encumbrances on any of the assets of Seller that arose in connection
with any failure (or alleged failure) to pay any Tax.
(b) Seller has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a
Tax assessment or deficiency.
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(c) Seller (i) has not been a member of an affiliated group
filing a consolidated federal income Tax Return and (ii) to Seller's
Knowledge does not have any Liability for the Taxes of any Person,
whether as a transferee or successor, by contract, or otherwise.
(d) Seller has consulted with its legal, tax, accounting and
financial advisors with regard to the legal, tax, accounting and
financial consequences and effects of the transactions contemplated by
this Agreement and acknowledges that Buyer has not made any
representations, warranties or assurances with respect to any of such
matters.
3.11 REAL PROPERTY. Seller owns no real property and no obligations relating to
owned or leased real property will be assumed by Newco or Buyer.
3.12 INTELLECTUAL PROPERTY.
(a) Each item of Intellectual Property owned or utilized in
the Business by Seller immediately prior to the Closing will be owned
or available for use by Newco on identical terms and conditions
immediately subsequent to the Closing. Seller has taken all necessary
and desirable action to maintain and protect each item of Intellectual
Property that it owns or uses.
(b) Seller has not interfered with, infringed upon,
misappropriated or otherwise come into conflict with any intellectual
property rights of third parties. Seller has never received any charge,
complaint, claim, demand or notice alleging any such interference,
infringement, misappropriation or violation (including any claim that
Seller must license or refrain from using any intellectual property
rights of any third party) by Seller.
(c) Seller possesses all right, title, and interest in and to
its Intellectual Property, free and clear of any Encumbrance. Seller
has not sublicensed any Intellectual Property to any third party.
3.13 TANGIBLE ASSETS. Seller owns or leases all equipment and other
tangible assets necessary for the conduct of the Business as presently conducted
and as presently proposed to be conducted. Each such tangible asset is
transferred "as is," except that manufacturer's or vendor's warranties will be
transferred to Newco to the extent they are assignable.
3.14 Contracts. Attached as Schedule 3.14 is a list of the following
contracts and other agreements to which Seller is a party:
(a) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease
payments in excess of $1,000 per annum;
(b) any agreement (or group of related agreements) for the
purchase or sale of commodities, supplies, products or other personal
property, or for the furnishing or receipt of services, in excess of
$1,000;
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(c) any purchase order for products or services in excess of
$1,000 that has not been completed or filled;
(d) any agreement concerning a partnership or joint venture;
(e) any agreement (or group of related agreements) under which
Seller has created, incurred, assumed or guaranteed any indebtedness
for borrowed money, or any capitalized lease obligation, in excess of
$1,000 or under which has been imposed an Encumbrance on any of its
assets, tangible or intangible;
(f) any agreement concerning confidentiality or
noncompetition;
(g) any agreement involving any of the members of Seller as a
party and Seller as the other party;
(h) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance or other plan or
arrangement for the benefit of its current or former members, managers,
directors, officers or Employees;
(i) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $1,000 or providing severance benefits;
(j) any agreement under which the consequences of a default or
termination could have a material adverse effect on the Business,
financial condition, operations, results of operations or future
prospects of the Business;
(k) any other agreement (or group of related agreements) the
performance of which involves total annual consideration in excess of
$1,000.
Seller has delivered to Buyer a correct and complete copy of
each written agreement listed in Schedule 3.14 and a written summary setting
forth the terms and conditions of each oral agreement. With respect to each such
agreement: (i) the agreement is legal, valid, binding, enforceable and in full
force and effect; (ii) the agreement will continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms following the
consummation of the transactions contemplated by this Agreement; (iii) no party
is in breach or default, and no event has occurred which, with notice or lapse
of time or both, would constitute a breach or default, or permit termination,
modification or acceleration, under the agreement; and (iv) no party has
repudiated any provision of the agreement.
3.15 NOTES AND ACCOUNTS RECEIVABLe. All notes and accounts receivable
of Seller are reflected properly on their books and records and are valid
receivables.
3.16 INSURANCE. During the past three years, Seller has maintained
property, casualty, liability and workers' compensation coverage, in
commercially reasonable amounts.
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3.17 WARRANTY. The services and products sold, leased or delivered by
Seller have been in conformity with all applicable contractual commitments and
all express and implied warranties, and Seller has no Liability (and, to
Seller's Knowledge, there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand against
Seller giving rise to any Liability) for replacement or repair thereof or other
damages in connection therewith, subject only to the reserve for warranty
claims. No product or service sold, leased or delivered by Seller is subject to
any guaranty, warranty or other indemnity beyond the applicable standard terms
and conditions of sale. Attached with Schedule 3.17 is a copy of the standard
terms and conditions of sale for Seller's products and services, if such
standard terms and conditions exist, (containing applicable, if any, guaranty,
warranty and indemnity provisions).
3.18 PRODUCT LIABILITY. Seller has no Liability (and to Seller's
Knowledge there is no Basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand against Seller giving
rise to any Liability) arising out of any injury to individuals or property as a
result of the ownership, possession or use of any product or service
manufactured, sold, leased or delivered by Seller.
3.19 EMPLOYEES.
(a) Seller is not a party to nor is it bound by any collective
bargaining agreement, nor has it experienced any strikes, grievances,
claims of unfair labor practices or other collective bargaining
disputes. Seller has not committed any unfair labor practice. There is
no organizational effort presently being made or threatened by or on
behalf of any labor union with respect to Employees of Seller.
(b) Schedule 3.19 lists for each Employee his or her name,
title, current compensation, vacation/sick time accrued, severance
agreements and participation in employee benefits. At the Closing, the
Seller will pay directly to all current Employees all compensation owed
or accrued as of the Closing Date, including wages, accruing but unpaid
bonuses, vacation time, sick time or other paid time off along with any
fees and/or penalties, which may exist in conjunction with the
termination of such Employees as of the Closing Date.
3.20. EMPLOYEE BENEFITS. Schedule 3.20 lists each Employee Benefit Plan
that Seller maintains, to which Seller contributes or has any obligation to
contribute, or with respect to which Seller has any material Liability or
potential Liability.
3.21. INVESTMENT. Seller understands that the Common Stock of Buyer
issued pursuant to the terms of this Agreement has not been registered under the
Securities Act, or under any state securities laws, and is being offered and
sold in reliance upon federal and state exemptions for transactions not
involving any public offering. Seller and any Person to whom stock is
distributed (i) is acquiring Buyer Common Stock solely for his or its own
account for investment purposes, and not with a view to the distribution thereof
(except to Seller's shareholders), (ii) is a sophisticated investor with
knowledge and experience in business and financial matters, (iii) by reason of
his or its business or financial experience or the business or financial
experience of his or its professional advisors who are unaffiliated with and who
are not compensated by Buyer or any affiliate or selling agent of Buyer,
directly or indirectly, could be reasonably assumed to have the capacity to
protect his or its own interests in connection with the transaction. (iv) has
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received certain information concerning Buyer and has had the opportunity to
obtain additional information as desired in order to evaluate the merits and the
risks inherent in holding Buyer Common Stock, (v) is able to bear the economic
risk and lack of liquidity inherent in holding Buyer Common Stock, and (vi) is
an Accredited Investor as defined in Regulation D promulgated by the SEC.
3.22. DISCLOSURE. To Seller's Knowledge, the representations and
warranties contained in this Section 3 do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements and information contained in this Section 3 not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants to
Seller that the statements contained in this Section 4 are correct and complete
as of the date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 4).
4.1 ORGANIZATION OF BUYEr. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Delaware.
4.2 AUTHORIZATION OF TRANSACTION. Buyer has full corporate power and
authority and, except as stated herein, has obtained all corporate approvals and
consents to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of Buyer, enforceable in accordance with its terms and conditions, subject to
applicable bankruptcy, insolvency, reorganization and other similar laws
affecting the enforceability of creditors' rights generally, general equitable
principles and the discretion of courts in granting equitable remedies.
4.3 NONCONTRAVENTION. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby will
require any consent from or violate any regulation, ruling or other restriction
of any government or agency to which Buyer is subject or any provision of the
certificate of incorporation of Buyer.
4.4 NO BROKER. No broker or finder has acted for Buyer in any manner in
connection with this Agreement and the consummation of the transactions
contemplated hereby.
4.5 STOCK. Assuming the truthfulness and accuracy of the
representations and warranties made by Seller in Section 3.21 hereof, at the
Closing, the shares of Buyer's Common Stock issued pursuant to Section 2.4 will
be duly authorized, validly issued, fully paid and nonassessable, and not issued
in violation of any preemptive rights of subscription or purchase.
5. COVENANTS.
5.1 GENERAL. During the period between the execution of this Agreement
and the Closing, each of the Parties will use its reasonable best efforts to
take all action and to do all things necessary, proper or advisable in order to
consummate and make effective the transactions contemplated by this Agreement,
including giving all notices to third parties and obtaining all necessary third
party consents.
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5.2 OPERATION OF BUSINESS. During the period between the execution of
this Agreement and the Closing, Seller and Newco will not engage in any
practice, take any action or enter into any transaction outside the Ordinary
Course of Business. Without limiting the generality of the foregoing, Seller
will not (i) pay any amount to any third party outside of the Ordinary Course of
Business (ii) fail to pay any accounts payable of the Seller when due and
payable; or (iii) take any collections actions on accounts receivables outside
the Ordinary Course of Business.
5.3 PRESERVATION OF BUSINESS. During the period between the execution
of this Agreement and the Closing, Seller and Newco will keep the Business and
the properties related thereto substantially intact, including its present
operations, physical facilities, working conditions and relationships with
lessors, licensors, suppliers, customers, and Employees.
5.4 FINANCIAL STATEMENTS. Prior to or promptly after the Closing,
Seller will cooperate with Buyer to prepare financial statements for Newco or
Seller as are required for any filings Buyer will need to make with the SEC with
respect to the transaction contemplated by this Agreement.
5.5 FULL ACCESS AND CONTINUING COOPERATION. Seller will permit
representatives of Buyer to have full access at all reasonable times, and in a
manner so as not to interfere with the normal business operations of Seller or
Newco, to all premises, properties, books, records (including Tax records),
contracts and documents of or pertaining to Seller and Newco.
6. CONDITIONS TO OBLIGATION TO CLOSE.
6.1 CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(a) Buyer shall have been satisfied in its sole discretion
with the results of its investigation of the Seller and Newco and that
the tax and accounting treatment that will be applied to Buyer with
respect to the transactions contemplated by this Agreement are
acceptable to Buyer; Buyer acknowledges that it is not relying on any
representations or assurances made by Seller with respect to such tax
and accounting treatment;
(b) The representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of
the Closing Date;
(c) Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing,
including obtaining all third party consents and taking all measures
necessary to effect a transfer of all Acquired Assets upon the Closing;
(d) The Board of Directors of Buyer shall have approved this
Agreement and the transaction contemplated by this Agreement.
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Buyer may waive any condition specified in this Section 6.1 if it executes a
writing so stating at or prior to the Closing.
6.2 CONDITIONS TO OBLIGATION OF SELLER. The obligation of Seller to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(a) Seller shall have been satisfied in its sole discretion
with the results of its investigation that the tax and accounting
treatment that will be applied to Seller with respect to the
transactions contemplated by this Agreement are acceptable to Seller;
Seller acknowledges that it is not relying on any representations or
assurances made by Buyer with respect to such tax and accounting
treatment;
(b) The representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of
the Closing Date;
(c) Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing.
Seller may waive any condition specified in this Section 6.2 if it executes a
writing so stating at or prior to the Closing.
7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties of the Parties contained in this Agreement shall survive the Closing
for a period of one year.
8. INDEMNIFICATION.
8.1 General.
(a) From and after the Closing, the Seller on the one hand and
the Buyer on the other hand shall indemnify each other as provided in
this Section 8. As used in this Agreement, the term "Damages" shall
mean all Liabilities, demands, claims, actions or causes of action,
regulatory, legislative or judicial proceedings or investigations,
assessments, levies, losses, fines, penalties, damages, costs and
expenses, including reasonable attorneys', accountants',
investigators', and experts' fees and expenses, sustained or incurred
in connection with the defense or investigation of any claim for
indemnification.
(b) In connection with any claim for indemnification, the
indemnified party will cooperate in all reasonable requests of the
indemnifying party.
8.2 INDEMNIFICATION OBLIGATIONS OF SELLER TO BUYER. Seller shall
defend, indemnify, save and keep harmless Buyer and its officers, directors,
consultants, employees successors and permitted assigns against and from all
Damages sustained or incurred by any of them resulting from or arising out of or
by virtue of:
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(a) any inaccuracy in or breach of any representation and
warranty made by Seller or Newco in this Agreement or in any closing
document delivered to Buyer in connection with this Agreement;
(b) any breach by Seller of, or failure by Seller to comply
with, any of its covenants or obligations under this Agreement
(including its obligations under this Section 8);
(c) the failure to discharge when due any Liability or
obligation of Seller or any claim against Buyer with respect to any
such Liability of Seller;
(d) any claims by parties other than Buyer to the extent
caused by acts or omissions of Seller on or prior to the Closing Date,
including claims for Damages which arise or arose out of Seller's
operation of the Business or by virtue of Seller's ownership of stock
of Newco or the Acquired Assets on or prior to the Closing Date;
(e) any Employee Pension Benefit Plan or any Employee Welfare
Benefit Plan which Seller or an ERISA affiliate has at any time
maintained or administered or to which Seller or any ERISA affiliate
has at any time contributed (including any liability for health
continuation requirements under Code ss.4980B or Part 6 of Subtitle B
of Title I of ERISA and any liability arising pursuant to Title IV of
ERISA for plan termination, withdrawal or partial withdrawal from any
Multiemployer Plan, or any lien to enforce any Title IV liability);
(f) any benefits accrued pursuant to any Employee Welfare
Benefit Plan or Employee Benefit Plan, whether formal or informal, at
or prior to the Closing Date other than benefits payable under
insurance policies constituting Acquired Assets;
(g) the failure of Seller or Newco to withhold and/or pay any
Taxes in connection with amounts paid or owing to any Employee,
independent contractor, creditor or any other third party on or before
the Closing Date; or
(h) any assessment of additional Taxes on Buyer for any period
for which Seller's or Newco's Tax Returns have been filed or any
dispute or claim concerning any Tax Liability of Seller or Newco
claimed or raised by any authority which accrued prior to the Closing
Date.
8.3 BUYER'S INDEMNIFICATION COVENANTS. Buyer shall defend, indemnify,
save and keep harmless Seller and its successors and permitted assigns against
and from all Damages sustained or incurred by any of them resulting from or
arising out of or by virtue of:
(a) any inaccuracy in or breach of any representation and
warranty made by Buyer in this Agreement or in any closing document
delivered to Seller in connection with this Agreement;
(b) any breach by Buyer of, or failure by Buyer to comply
with, any of its covenants or obligations under this Agreement
(including its obligations under this Section 8); or
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(c) any claims by third parties which arise out of Buyer's
ownership of Newco stock or operation of the Business after the Closing
Date.
8.4 LIMITATIONS TO LIABILITY. Notwithstanding anything to the contrary
in this Section 8, the liability of the parties hereto for any obligations under
this Section 8, except that provided in Sections 8.2(g) and 8.2(h), shall be
limited such that no party hereto shall be required to indemnify the other party
unless and until the aggregate amount of indemnifiable Damages that may be
recovered from such party exceeds $5,000 (after which the indemnifying party
shall be liable for the full Damages from the first dollar of Damages). Buyer
may deduct the amount of all of Seller's liability pursuant to this Section 8
from the Common Shares being held back pursuant to Section 2.4. Any such
deduction shall take place at a value of $1.50 per share.
8.5 WORKING CAPITAL.
(a) Seller will guarantee that Working Capital at Closing is
not negative. "Working Capital" is defined as Cash at Closing plus
Accounts Receivable and Certain Prepaid Items (as identified in
Schedule 8.6), less Accounts Payable, accrued bonus payments, and any
deferred revenue determined by Seller in accordance with generally
accepted accounting principles ("GAAP") applied on a basis consistent
with past practices as set forth on the Working Capital schedule
attached to this agreement as Exhibit C (the "Estimated Working Capital
Schedule").
(b) Not more than five days before the Closing Date, Seller
shall deliver to Buyer the Estimated Working Capital Schedule setting
forth Seller's good-faith estimate of the Working Capital at Closing
(the "Estimated Working Capital"), which shall be certified by the
chief financial officer of Seller. Buyer shall be entitled to inspect
all work papers, schedules and other supporting materials relating to
the preparation of the Estimated Working Capital Schedule and to
consult with Seller and its representatives regarding the methods used
to calculate the Estimated Working Capital Schedule.
(c) If the Estimated Working Capital is less than -$5,000, at
the Closing, an amount equal to the difference, if any, between the
Estimated Working Capital and $0.0 shall be deducted from the Common
Stock issuable to Seller at the Closing, from the first dollar below
$0.0, at a value per share of $1.50. If the Estimated Working Capital
is less than -$25,000, the amount below -$25,000 shall be contributed
to Newco by Seller in cash as a condition to the Closing.
8.6 WORKING CAPITAL ADJUSTMENT.
(a) On a date no later than 60 days after the Closing Date (the
"Calculation Date"), Buyer, with reasonable, good-faith assistance from
Seller, shall prepare and deliver to Seller a statement (the "Actual
Working Capital Schedule") setting forth Buyer's good-faith
determination of the actual Working Capital at Closing (the "Actual
Working Capital"), which shall be certified by the chief financial
officer of Buyer. Seller shall be entitled to inspect all work papers,
schedules and other supporting materials relating to the preparation of
the Actual Working Capital Schedule and to consult with Buyer regarding
the methods used to calculate the Actual Working Capital.
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(b) The Actual Working Capital Schedule shall become final and
binding upon Seller and Buyer unless Seller notifies Buyer of a
disagreement with respect to any matter contained therein (a "Notice of
Disagreement") within 30 days after the receipt thereof. A Notice of
Disagreement shall specify in reasonable detail the nature of any
disagreement so asserted. For a period of 30 days after the delivery of
the Notice of Disagreement, Seller and Buyer shall attempt in good
faith to resolve in writing all of their differences with respect to
each matter specified in the Notice of Disagreement, in which case such
resolution shall be final and binding upon the parties.
(c) If, at the end of such 30-day period, Seller and Buyer have
not resolved in writing all of their differences with respect to any
such matter, then each unresolved matter (a "Disputed Matter") shall be
submitted to and reviewed by an independent certified public accounting
firm (the "Accounting Arbitrator"). The Accounting Arbitrator shall
consider only the Disputed Matters and shall act promptly to resolve in
writing all Disputed Matters. The determinations of the Accounting
Arbitrator with respect to the Disputed Matters shall be final and
binding upon Seller and Buyer. Judgment upon the Accounting
Arbitrator's award may be entered in any court having jurisdiction
thereof.
(d) Seller shall be responsible for and pay (1) all of its
expenses incurred in preparing the Estimated Working Capital Schedule,
assisting in the preparation of and reviewing the Actual Working
Capital Schedule, and resolving any Disputed Matter, and (2) 50% of the
fees and expenses of any Accounting Arbitrator incurred in resolving
any Disputed Matter. Buyer shall be responsible for and pay (1) all of
its expenses incurred in reviewing the Estimated Working Capital
Schedule, preparing the Actual Working Capital Schedule, and resolving
any Disputed Matter, and (2) 50% of the fees and expenses of any
Accounting Arbitrator incurred in resolving any Disputed Matter.
(e) Within 10 days after the final determination of the Actual
Working Capital, an amount equal to the difference, if any, between the
Estimated Working Capital as shown on the Estimated Working Capital
Schedule and the Actual Working Capital shall be paid by Buyer to
Seller if the Actual Working Capital exceeds the Estimated Working
Capital or by Seller to Newco if the Estimated Working Capital exceeds
the Actual Working Capital; provided, such amount shall be adjusted for
any amounts paid by either Buyer or Seller pursuant to Section 8.5(c).
Any payments by Seller to bring the level of Working Capital to at
least -$25,000 shall be paid in cash. Any payments by Seller to raise
the level of Working Capital between -$25,000 and $0.0 shall be payable
in Buyer's Common Stock at a value of $1.50 per share. Any payments by
Buyer shall be in Common Stock or cash based on the thresholds shown
above.
8.7 EXCLUSIVE REMEDY. Absent fraud, the remedies available under this
Section 8 shall be the exclusive remedy available to the parties hereto for a
breach by the other party of any of the representations, warranties and
guarantees set forth herein.
9. TERMINATION.
9.1 TERMINATION OF AGREEMENT. This Agreement may be terminated as
provided below:
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(a) Buyer and Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(b) Buyer may terminate this Agreement by giving written
notice to Seller, prior to the Closing, that Buyer in its sole
discretion is not satisfied with the results of its continuing
business, legal and accounting due diligence regarding Seller;
(c) Buyer or Seller may terminate this Agreement if the other
party has breached any material representation or covenant in this
Agreement.
9.2 EFFECT OF TERMINATION. If any party terminates this Agreement
pursuant to Section 9.1 above, all rights and obligations of the parties
hereunder shall terminate without any Liability of any party to any other party
(except for any Liability of any party then in breach).
10. NON-COMPETE AND NON-SOLICITATION.
10.1 COVENANT NOT TO COMPETE. Beginning on the Closing Date and
continuing for the Time Period (as defined in Section 10.3) Seller will not
engage directly or indirectly in the Business or any related business within the
Territory (as defined in Section 10.4); provided, however, that Seller will not
be deemed to have engaged in the Business or any related business solely by
reason of owning less than 1% of the outstanding stock of any publicly traded
corporation.
10.2 NON-SOLICITATION. Beginning on the Closing Date and continuing for
the Time Period (as defined in Section 10.3) Seller will not, without the
written consent of Buyer, solicit any past or existing customers of the Buyer to
perform services related to or in direct competition with those performed by the
Buyer.
10.3 TIME PERIOD. For purposes of this Agreement "Time Period" shall
mean three years unless a court of competent jurisdiction determines that such
period is unenforceable, in which case "Time Period" shall mean two years,
unless a court of competent jurisdiction determines that such period is
unenforceable, in which case "Time Period" shall mean one year.
10.4 TERRITORY. For purposes of this Agreement "Territory" shall mean
the entire world, unless a court of competent jurisdiction finds such territory
to be unenforceable, in which case "Territory" shall mean the United States of
America.
11. MISCELLANEOUS.
11.1 COVENANT TO MAINTAIN RECORDS. For a period of two years from the
Closing Date, Buyer agrees not to destroy any business records or files acquired
in conjunction with the Acquired Assets and further agrees to allow Seller
reasonable access to such business records and files for reasonable purposes
during normal business hours.
11.2 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release make any public or private announcement or communication relating
to the subject matter of this Agreement prior to the Closing without the prior
written approval of the other Party; provided, however, that any Party may make
any public disclosure it believes in good faith is required by applicable law
(in which case the disclosing party will use its reasonable best efforts to
advise the other Parties prior to making the disclosure).
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11.3 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
11.4 ENTIRE AGREEMENT. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements or representations by or between the
Parties, written or oral, to the extent they related in any way to the subject
matter hereof.
11.5 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No party may assign either this Agreement or
any of its rights, interests or obligations hereunder without the prior written
approval of the other party.
11.6 COUNTERPARTS PDF'S AND FACSIMILIES. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together will constitute one and the same instrument. The exchange of
copies of this Agreement and of signature pages by facsimile transmission or by
e-mail in PDF format shall constitute effective execution and delivery of this
Agreement as to the Parties and may be used in lieu of the original Agreement
for all purposes. Signatures on behalf of the Parties transmitted by facsimile
or by e-mail in PDF format shall be deemed to be original signatures for all
purposes.
11.7 HEADINGS. The Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.8 NOTICES. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given when delivered
personally or by professional overnight courier addressed to the intended
recipient as set forth below:
If to Seller or Newco: Copy to:
World Talk Radio, Inc. World Talk Radio, Inc.
Attn: ▇▇ ▇▇▇▇▇ Attn: ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Buyer: Copy to:
Modavox, Inc. ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
Attn: ▇▇▇▇▇ ▇. ▇▇▇, CEO Attn: P. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇2-417-2990 fax
▇▇▇.▇▇▇.▇▇▇▇ Fax
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Any Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, facsimile, ordinary mail or electronic
mail), but no such notice, request, demand, claim or other communication shall
be deemed to have been duly given unless and until it actually is received by
the intended recipient. Any Party may change the address to which notices,
requests, demands, claims and other communications hereunder are to be delivered
by giving the other party notice in the manner herein set forth.
11.9 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Arizona without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Arizona or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Arizona.
11.10 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Buyer
and Seller. No waiver by any party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
11.11 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof, or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
11.12 EXPENSES. Each of Buyer and Seller will bear its own costs and
expenses (including legal and accounting fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby. Without
limiting the generality of the foregoing, all transfer, documentary, sales, use,
stamp, registration and other such Taxes, and all conveyance fees, recording
charges and other fees and charges (including any penalties and interest)
incurred in connection with the consummation of the transactions contemplated by
this Agreement, if any, shall be paid by the Seller when due, and the Seller
will, at its own expense, file all necessary Tax Returns and other documentation
with respect to all such Taxes, fees and charges, and, if required by applicable
law, the Parties will, and will cause their affiliates to, join in the execution
of any such Tax Returns and other documentation.
11.13 INCORPORATION OF EXHIBITS AND SCHEDULES. The exhibits and
schedules identified in this Agreement are incorporated herein by this reference
and made a part hereof.
11.14 CONSTRUCTION. All references herein to the masculine, neuter or
singular shall be construed to include the masculine, feminine, neuter or
plural, where applicable. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The language in all parts of this Agreement
shall in all cases be construed as a whole according to its fair meaning and not
strictly for or against either party. The Section headings contained in the
Agreement are for reference purposes only and will not affect the meaning or
interpretation of this Agreement in any way. A reference to a numbered Section
in this Agreement refers to a Section in this Agreement.
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11.15 SUBMISSION TO JURISDICTION. Each of the Buyer and Seller submits
to the jurisdiction of any state or federal court sitting in Arizona, in any
action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety or other
security that might be required of any other party with respect thereto. Any
party may make service on the other party by sending or delivering a copy of the
process to the party to be served at the address and in the manner provided for
the giving of notices in Section 11.8 above. Nothing in this Section 11.15,
however, shall affect the right of any party to serve legal process in any other
manner permitted by law. Each party agrees that a final judgment in any action
or proceeding so brought shall be conclusive and may be enforced by suit on the
judgment or in any other manner provided by law or in equity.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
BUYER:
MODAVOX, INC.
By /S/ ▇▇▇▇▇ ▇. ▇▇▇
--------------------
▇▇▇▇▇ ▇. ▇▇▇, CEO
SELLER:
WORLD TALK RADIO, INC.
By /S/ ▇▇▇ ▇▇▇▇▇▇▇▇ CEO
-----------------------
NEWCO:
WTR ACQUISITION, INC.
By /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, WTR
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
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EXHIBIT A
TRANSFERRED AND EXCLUDED ASSETS
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EXHIBIT B
REVENUES OF THE BUSINESS, BY CUSTOMER
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EXHIBIT C
WORKING CAPITAL SCHEDULE
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