EXHIBIT 10(F)
ASSET PURCHASE AGREEMENT
by and between
TELENETICS CORPORATION
and
GREENLAND CORPORATION
April 5, 1999
TABLE OF CONTENTS
SECTION PAGE
1. Definitions ...............................................................1
2. Basic Transaction .........................................................2
(a) Purchase and Sale of the Acquired Assets .........................2
(b) Assumption of Liabilities ........................................2
(c) Purchase Price ...................................................2
(d) The Closing ......................................................2
(e) Deliveries at the Closing ........................................2
(f) Allocation .......................................................3
3. Representations and Warranties of the Seller ...............................3
(a) Organization of the Seller .......................................3
(b) Authorization of Transaction. ....................................3
(c) Noncontravention .................................................3
(d) Title to the Acquired Assets .....................................3
(e) Assumed Contracts ................................................4
(f) Intellectual Property ............................................4
(g) Compliance with Laws .............................................4
(h) Consents .........................................................4
(i) Tax Matters ......................................................4
(j) Litigation .......................................................5
(k) Related Parties ..................................................5
(l) Underlying Documents .............................................5
(m) Brokers' Fees ....................................................5
(n) Disclosure .......................................................5
(o) Investment Representations .......................................5
4. Representations and Warranties of the Buyer ...............................6
(a) Organization and Capitalization of the Buyer......................6
(b) Authorization of Transaction .....................................7
(c) Noncontravention .................................................7
(d) Concerning the Shares ............................................7
(e) Approvals ........................................................7
(f) Information Provided .............................................8
(g) Litigation .......................................................8
(h) Brokers' Fees ....................................................8
5. Post-Closing Covenants and Agreements .....................................8
(a) General ..........................................................8
(b) Condition to Transfer of Certain Contracts .......................8
(c) Delivery of Hardware Design and Related Materials ................9
(d) Introductions ....................................................9
(e) Survival .........................................................9
-i-
SECTION PAGE
6. Indemnification ...........................................................9
(a) Indemnification of Losses ..............................9
(b) Payment ................................................9
(c) Notice of Claims ......................................10
(d) Third Party Claims.....................................10
(e) Disputed Claims........................................10
(f) Survival of Representations and Warranties.............10
7. Miscellaneous.............................................................10
(a) Press Releases and Announcements.......................10
(b) No Third Party Beneficiaries...........................10
(c) Entire Agreement.......................................10
(d) Succession and Assignment .............................10
(e) Counterparts...........................................11
(f) Headings...............................................11
(g) Notices ...............................................11
(h) Governing Law..........................................11
(i) Amendments and Waivers ................................11
(j) Expenses...............................................12
(k) Construction ..........................................12
(1) Incorporation of Exhibits and Schedules ...............12
(m) Bulk Transfer Laws ....................................12
(n) Transfer Taxes.........................................13
Disclosure Schedule
Exhibit A - Wireless Technology
Exhibit B - Form of Certificate of Determination of Rights, Preferences,
Privileges and Restrictions of Series B Convertible Preferred Stock
Exhibit C - Form of ▇▇▇▇ of Sale
Exhibit D - Form of Assignment and Assumption of the Assumed Contracts
Exhibit E - Form of Trademark Assignment
Exhibit F - Form of Patent Assignment
Exhibit G - AMR Inventory List
Exhibit H - "AirLink AMR"
-ii-
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into on
April 5, 1999, by and between Telenetics Corporation, a California corporation
(the "Buyer"), and Greenland Corporation, a Nevada corporation (the "Seller").
This Agreement contemplates a transaction in which the Buyer will purchase
certain assets and assume certain contracts from the Seller in return for the
consideration described herein.
NOW, THEREFORE, in consideration of the premises and the mutual
promises made in this Agreement, and in consideration of the representations,
warranties and covenants contained in this Agreement, the parties agree as
follows.
1. DEFINITIONS.
"Acquired Assets" means the following assets of the Seller:
(a) All right, title and interest in and to the Wireless
Technology.
(b) All Intellectual Property associated with the Wireless
Technology.
(c) All rights under all Assumed Contracts.
(d) All RF meter modules, software, firmware, codes,
documents and other personal property or information held or used by the
Seller in connection with the Wireless Technology.
(e) All marketing plans and sales leads.
(f) All right, title and interest in and to the "Airlink"
name and trademark.
"Assumed Contracts" means the contracts identified in the
Disclosure Schedule to be assigned to the Buyer.
"Closing" and "Closing Date" have the meanings set forth in
Section 2(d) below.
"Disclosure Schedule" has the meaning set forth in Section 3
below.
"Intellectual Property" means (a) patents, patent
applications, patent disclosures, and improvements thereto, (b) trademarks,
service marks, trade dress, logos, trade names and corporate names and
registrations and applications for registration thereof, (c) copyrights and
registrations and applications for registration thereof, (d) mask works and
registration and applications for registration thereof, (e) trade secrets and
confidential business information (including ideas, formulas, compositions,
inventions (whether patentable or unpatentable and whether or not reduced to
practice), know-how, manufacturing and production processes and techniques,
research and development information, drawings, specifications, designs,
plans, proposals, technical data,
copyrightable works, financial, marketing and business data, pricing and cost
information, business and marketing plans, and customer and supplier lists and
information), (f) other proprietary rights, and (g) copies and tangible
embodiments thereof (in whatever form or medium).
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice.
"Purchase Price" has the meaning set forth in Section 2(c)
below.
"Wireless Technology" has the meaning set forth in EXHIBIT
A.
2. BASIC TRANSACTION.
(a) PURCHASE AND SALE OF THE ACQUIRED ASSETS. On and
subject to the terms and conditions of this Agreement, the Buyer agrees to
purchase from the Seller, and the Seller agrees to sell, transfer, convey, and
deliver to the Buyer, all of the Acquired Assets at the Closing for the
consideration specified below in this Section 2.
(b) ASSUMPTION OF LIABILITIES. On and subject to the
terms and conditions of this Agreement, the Buyer agrees to assume and become
responsible for all of the Assumed Contracts at the Closing as described in the
Assignment and Assumption of Assumed Contracts in the form attached as an
exhibit to this Agreement. The Buyer will not assume or have any responsibility,
however, with respect to any other obligations or liabilities of the Seller
which are not Assumed Contracts.
(c) PURCHASE PRICE. At the Closing, the Buyer shall
deliver to the Seller a certificate representing 128,571 shares (the "Shares")
of the Buyer's Series B Convertible Preferred Stock (the "Purchase Price"). The
Shares shall have the rights, preferences, privileges and restrictions set forth
in the form of Certificate of Determination of Rights, Preferences, Privileges
and Restrictions of Series B Convertible Preferred Stock attached hereto as
EXHIBIT B (the "Certificate of Determination").
(d) THE CLOSING. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of ▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, concurrently with the execution of this Agreement by all parties or at
such other place and time as may be agreed by the parties (the "Closing Date").
(e) DELIVERIES AT THE CLOSING. At the Closing, each
party shall deliver to the other all such agreements, documents and
instruments contemplated by this Agreement or necessary for the conveyance of
the Acquired Assets to the Buyer and the assumption of the Assumed Contracts
by the Buyer. In addition, the Seller shall provide to the Buyer a list of
persons who have prior experience with the installation of the Wireless
Technology and who may be able to provide assistance to the Buyer in connection
with the Buyer's installation of the Wireless Technology.
-2-
(f) ALLOCATION. The parties agree to allocate the
Purchase Price (and an other capitalizable costs) among the Acquired Assets for
all purposes (including financial accounting and tax purposes) in the manner
determined by the Buyer.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
represents and warrants to the Buyer that the statements contained in this
Section 3 are correct and complete as of the date of this Agreement and shall be
true and correct as of the Closing Date, except as set forth in the Disclosure
Schedule and initialed by the parties.
(a) ORGANIZATION OF THE SELLER. The Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada. The Seller is duly qualified to conduct business as a
foreign corporation in the State of California and is in good standing under the
laws of the State of California.
(b) AUTHORIZATION OF TRANSACTION. The Seller has full
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. Without limiting the generality of the foregoing, the
Seller has taken all actions required for the execution, delivery and
performance of this Agreement by the Seller and the sale of the Acquired Assets
as provided herein. This Agreement constitutes the valid and legally binding
obligation of the Seller, enforceable in accordance with its terms. The person
or persons who have executed this Agreement on behalf of the Seller are duly
authorized to do so by the Board of Directors of the Seller.
(c) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any statute, regulation, rule, judgment,
order, decree, stipulation, injunction, charge or other restriction of any
government, governmental agency or court to which the Seller is subject or any
provision of the articles or bylaws, as amended, of the Seller or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require a notice under any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, security interest or other arrangement to
which the Seller is a party or by which the Seller is bound or to which any of
the Seller's assets is subject. The Seller need not give any notice to, make any
filing with, or obtain any authorization, consent or approval of any government
or governmental agency in order for the parties to consummate the transactions
contemplated by this Agreement.
(d) TITLE TO THE ACQUIRED ASSETS. The Seller has good and
marketable title, free and clear of all mortgages, liens, pledges, claims,
easements, rights of way, conditions, security interests, encumbrances,
restrictions, charges, imperfections of title or equities of any nature
whatsoever, to all of the Acquired Assets, respectively, real and personal,
tangible and intangible, to be sold, conveyed, transferred and delivered
hereunder. At the Closing, the Buyer will obtain good and marketable title to
the Acquired Assets, free and clear of all mortgages, liens, pledges, claims,
easements, rights of way, conditions, security interests, encumbrances,
restrictions, charges, imperfections of title or equities of any nature
whatsoever. All of the equipment and tangible personal property constituting a
portion of the Acquired Assets is in good operating condition and repair, normal
wear and tear excepted.
-3-
(e) ASSUMED CONTRACTS. Set forth in the Disclosure
Schedule is a list of all written agreements, leases, contracts and commitments
relating to the Acquired Assets to which the Seller is a party or is otherwise
bound as of the date of this Agreement. The Seller has supplied the Buyer with
true, correct and complete copies of each such Assumed Contract. The Seller
makes no representations or warranties regarding the enforceability or validity
of the Assumed Contracts. Notwithstanding the foregoing, the Seller acknowledges
receipt of the following sums (the "Deposits") from certain utilities (the
"Utilities") in connection with pilot projects (the "Pilot Projects") relating
to the Acquired Assets: (i) $15,000 from Emerald People Utility District in
Eugene, Oregon; (ii) $10,000 from Third Taxing District in Norwalk, Connecticut;
and (iii) $10,000 from Springville Electric in Springville, Utah. The Seller
agrees that it is now and shall remain at all times after the Closing liable for
return of the Deposits to the Utilities and that the Buyer assumes no liability
therefor. The Seller further agrees that it will provide reasonable cooperation
to the Buyer in connection with the Buyer's pursuit, if any, of the Pilot
Projects.
(f) INTELLECTUAL PROPERTY. None of the Acquired Assets or
any Intellectual Property held or used by the Seller in connection with the
Acquired Assets infringes the Intellectual Property or other proprietary rights
of any other party. All Intellectual Property developed for the Seller was so
developed under agreements with employees, consultants or others that provide
that the Intellectual Property so developed is a "work made for hire" or
otherwise providing for the assignment of all rights thereto to the Seller. To
the knowledge of the Seller, the manufacture, use, sale, marketing or
distribution of the Acquired Assets does not violate or infringe on any patent
or any proprietary or personal right of any person or firm.
(g) COMPLIANCE WITH LAWS. The business of the Seller
has been operated in compliance with all federal, state, local and foreign
laws, regulations and orders, the violation of which would have a material
adverse effect upon any of the Acquired Assets. All reports and filings
required to be made by the Seller with respect to the Acquired Assets under
foreign, federal, state and local statutes, laws, regulations, rules and
ordinances relating to health, safety and protection of the environment have
been filed in a timely manner, and no such reports or filings are currently
required that have not been made.
(h) CONSENTS. No approvals or consents of or assignments
by any person (including, without limitation, any federal, state or local
governmental or administrative authorities) are necessary in connection with the
execution, delivery or performance of this Agreement.
(i) TAX MATTERS. All taxes, including, without
limitation, income, excise, property, sales, transfer, use, franchise,
payroll, employees' income withholding and social security taxes imposed or
assessed by the United States or by any foreign country or by any state,
municipality, subdivision or instrumentality of the United States or of any
foreign country, or by any other taxing authority, which are due or payable
by the Seller with respect to the Acquired Assets, and all interest,
penalties and additions thereon, whether disputed or not, have been paid in
full; all tax returns or other documents required to be filed in connection
therewith have been accurately prepared and duly and timely filed. No issues
have been raised (or are currently pending) by the Internal Revenue Service
or any other taxing authority in connection with any of the returns and
reports referred to above, and no waivers of statutes of limitations have
been given or requested with respect to the Seller in connection therewith.
-4-
(j) LITIGATION. There is no claim, dispute, action,
proceeding (including arbitration), suit, appeal or investigation, at law or
in equity, pending (other than those, if any, with respect to which service
of process or similar notice has not yet been made and which are not within
the knowledge of the Seller) or, to the knowledge of the Seller, threatened
against the Seller involving the Wireless Technology or any of the Acquired
Assets before any court, agency, authority, arbitration panel or other
tribunal. The Seller is not subject to or in default with respect to any
notice, order, writ, injunction or decree of any court, agency, authority,
arbitration panel or other tribunal involving the Wireless Technology or any
of the Acquired Assets.
(k) RELATED PARTIES. No officer, director or other affiliate
of the Seller, directly or indirectly, is party to any material arrangement
affecting the design, development, marketing, distribution or use of the
Wireless Technology or the Acquired Assets.
(l) UNDERLYING DOCUMENTS. Copies of all documents listed or
described in the Disclosure Schedule have been furnished or made available to
the Buyer. All such documents are true and complete copies, and there are no
amendments or modifications thereto, except as expressly noted in the Disclosure
Schedule.
(m) BROKERS' FEES. The Seller has no liability or obligation
to pay any fees or commissions to any broker, finder or agent with respect to
the transactions contemplated by this Agreement for which the Buyer could become
liable or obligated.
(n) DISCLOSURE. Neither this Agreement nor any of the
schedules or exhibits hereto contains any untrue statement of a material fact or
omits a material fact necessary to make the statements contained herein or
therein, in light of the circumstances in which they were made, not misleading,
and there is no fact which has not been disclosed to the Buyer that materially
affects adversely or could reasonably be anticipated to materially affect
adversely the Wireless Technology or the Acquired Assets.
(o) INVESTMENT REPRESENTATIONS. The Seller hereby represents
and warrants to the Buyer with respect to the acquisition of the Shares as
follows:
(i) INVESTMENT EXPERIENCE. The Seller has
substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to the Buyer so that the Seller
is capable of evaluating the merits and risks of its investment in the Buyer and
has the capacity to protect its own interests.
(ii) ACCREDITED INVESTOR. The Seller is either
(i) an "accredited investor" as that term is defined in Securities and
Exchange Commission Rule 501 of Regulation D as presently in effect, or (ii)
has a preexisting personal or business relationship with the Buyer or any of
its officers, directors or controlling persons, or by reason of the Seller's
business or financial experience or the business or financial experience of
the Seller's professional advisors who are unaffiliated with and who are not
compensated by the Buyer or any affiliate or selling agent of the Buyer,
directly or indirectly, has the capacity to protect the Seller's own
interests in connection with the acquisition of the Shares.
-5-
(iii) INVESTMENT. The Seller is acquiring the
Shares for investment by the Seller and its affiliates, not as a nominee or
agent, and not with the view to, or for resale in connection with, any
distribution thereof. The Seller understands that the Shares have not been,
and will not be, registered under the Securities Act of 1933 ("Securities
Act") by reason of a specific exemption from the registration provisions of
the Securities Act, the availability of which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of the
Seller's representations as expressed herein.
(iv) RULE 144. The Seller acknowledges that the
Shares must be held indefinitely unless subsequently registered under the
Securities Act or unless an exemption from such registration is available. The
Seller is aware of the provisions of Rule 144 promulgated under the Securities
Act which permit limited resale of shares purchased in a private placement
subject to the satisfaction of certain conditions, including, among other
things, the existence of a public market for the shares, the availability of
certain current public information about the Buyer, the resale occurring not
less than a specified number of years after a party has purchased and paid for
the security to be sold, the sale being effected through a "broker's
transaction" or in transactions directly with a "market maker" and the number of
shares being sold during any three-month period not exceeding specified
limitations.
(v) ACCESS TO DATA. The Seller has had an opportunity
to discuss the Buyer's business, management and financial affairs with its
management. The Seller also has had an opportunity to ask questions of officers
of the Buyer, which questions were answered to its satisfaction. The Seller
understands that such discussions, as well as any written information issued by
the Buyer, were intended to describe certain aspects of the Buyer's business and
prospects but were not a thorough or exhaustive description. The Seller's
decision to enter into the transactions contemplated hereby is based on its own
evaluation of the risks and merits of the purchase and the Buyer's proposed
business activities. Without limiting the generality of the foregoing, the
Seller has had the opportunity to obtain and to review the following documents
of the Buyer: (1) Form 10-KSB for the fiscal year ended March 31, 1998; (2) Form
10-QSB for the quarter ended June 30, 1998; and (3) Form 10-QSB for the quarter
ended September 30, 1998, in each case as filed with the SEC. The Buyer
understands that its investment in the Shares involves a high degree of risk.
(vi) TAX LIABILITY. The Seller has reviewed with
its own tax advisors the federal, state, local and foreign tax consequences of
this investment and the transactions contemplated by this Agreement. With
respect to such tax consequences, the Seller relies solely on such advisors and
not on any statements or representations of the Buyer or any of its agents. The
Seller understands and agrees that it (and not the Buyer) shall be responsible
for any of its own tax liability that may arise as a result of this investment
or the transactions contemplated by this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents
and warrrants to the Seller that the statements contained in this Section 4 are
correct and complete as of the date of this Agreement.
(a) ORGANIZATION AND CAPITALIZATION OF THE BUYER. The Buyer
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of California. As
-6-
of March 31, 1999, the authorized capital stock of the Buyer consisted of (a)
25,000,000 shares of Common Stock, without par value, (b) 2,500,000 shares of
Series A 7.5% Convertible Redeemable Preferred Stock ("Series A Preferred
Stock") and (b) 2,500,000 shares of undesignated Preferred Stock. Upon the
filing of the Certificate of Determination with the California Secretary of
State, the authorized capital stock of the Buyer shall consist of (a) 25,000,000
shares of Common Stock, (b) 2,500,000 shares of Series A Preferred Stock, (c)
128,571 shares of Series B Convertible Preferred Stock and (c) 2,371,429 shares
of undesignated Preferred Stock.
(b) AUTHORIZATION OF TRANSACTION. The Buyer has all
necessary corporate power and corporate authority to execute and deliver this
Agreement and to perform its obligations hereunder. Without limiting the
generality of the foregoing, the Buyer has taken all actions required for the
execution, delivery and performance of this Agreement by the Buyer, the
purchase of the Acquired Assets and the issuance of the Shares to the Seller
as provided herein. This Agreement constitutes the valid and legally binding
obligation of the Buyer, enforceable in accordance with its terms except as
enforceability may be limited by the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting
creditors' rights and the application of general principles of equity
including, but not limited to, the inability to exercise the right to
specific performance in certain circumstances. The person or persons who have
executed this Agreement on behalf of the Buyer have been duly authorized to
do so by the Buyer.
(c) NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the actions contemplated hereby, will
(i) violate any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge or other restriction of any government, governmental agency
or court to which the Buyer is subject or any provision of its charter or bylaws
or (ii) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, security interest, or other arrangement to which the Buyer is a
party or by which it is bound or to which any of its assets is subject in a
manner or to an extent that would materially and adversely affect the validity
or enforceability of, or the authority or ability of the Buyer to perform its
obligations under, this Agreement or any of the other documents contemplated by
this Agreement. Other than federal and state securities law notices in
connection with the issuance of the Shares, the Buyer does not need to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the parties to
consummate the transactions contemplated by this Agreement.
(d) CONCERNING THE SHARES. The Shares have been duly
authorized and, when issued in accordance with this Agreement, and the shares of
Common Stock underlying the Shares, when issued upon conversion of the Shares,
will be duly and validly issued, fully paid and non-assessable and will not
subject the holder thereof to personal liability by reason of being such holder.
There are no preemptive rights of any stockholder of the Buyer, as such, to
acquire any of the Shares.
(e) APPROVALS. No authorization, approval or consent of or
filing with any court, governmental body, regulatory agency, self-regulatory
organization, or stock exchange or market or the shareholders of the Buyer is
required to be obtained by the Buyer for the issuance and sale of the
-7-
Shares and the Common Stock issuable upon conversion thereof other than the
requirements of any applicable blue sky laws. The Buyer has taken or will take
all actions necessary to satisfy the requirements of applicable blue sky laws.
(f) INFORMATION PROVIDED. The information provided by or on
behalf of the Buyer to the Seller and referred to in Section 3(o)(v) of this
Agreement does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading.
(g) LITIGATION. There is no action, suit, proceeding, inquiry
or investigation before or by any court, public board or body pending or, to the
knowledge of the Buyer or any of its subsidiaries, threatened against or
affecting the Buyer or any of its subsidiaries, wherein an unfavorable
decision, ruling or finding would materially and adversely affect the validity
or enforceability of, or the authority or ability of the Buyer to perform its
obligations under, this Agreement or any of the other documents contemplated by
this Agreement.
(h) BROKERS' FEES. The Buyer has no liability or obligation to
pay any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
5. POST-CLOSING COVENANTS AND AGREEMENTS. The parties agree as follows
with respect to the period following the Closing.
(a) GENERAL. If at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the parties will take such further action (including, without
limitation, the execution and delivery of such further instruments and
documents) as the other party may reasonably request. The Seller expressly
agrees that it will, without demanding any further consideration therefor, at
the request of the Buyer, provide all assistance and execute any papers deemed
necessary or desirable by the Buyer, its successors, assigns and legal
representatives, for perfecting the Buyer's right, title and interest in and to
the Intellectual Property and the Acquired Assets, including without limitation,
the acquisition, sustenance, reexamination or reissuance of patents relating to
the Intellectual Property and the maintenance and perfection of the rights of
the Buyer and its successors and assigns to such patents. The Seller further
expressly agrees that it will promptly, at the request of the Buyer, cause the
inventors and other prior owners, if any, of the Intellectual Property and the
Acquired Assets, to provide all assistance and execute all such papers for the
purposes described in this paragraph, without cost to the Buyer.
(b) CONDITION TO TRANSFER OF CERTAIN CONTRACTS. At the
Closing, the Buyer may elect to close the transactions contemplated hereby
notwithstanding the fact that the Seller may have failed to obtain consents
to the transfer of one or more Assumed Contracts which by their terms require
the consent of any other contracting party thereto to the assignment thereof
to the Buyer. The terms of this paragraph (b) shall govern the transfer of
the benefits of each such Assumed Contract. Notwithstanding anything herein
to the contrary, the parties acknowledge and agree that at the Closing the
Seller will not assign to the Buyer any Assumed Contract which by its terms
requires the consent of any other contracting party thereto unless each
consent has been obtained prior to the Closing Date. With respect to each
such unassigned Assumed Contract, after the Closing Date the
-8-
Seller shall continue to deal with the other contracting party(ies) to that
Assumed Contract as the prime contracting party and shall use its best efforts
to obtain the consent of all required parties to the assignment of such Assumed
Contract, but the Buyer shall be entitled to the benefits of such Assumed
Contract accruing after the Closing Date to the extent that the Seller may
provide the Buyer with such benefits without violating the terms of such Assumed
Contract; and the Buyer agrees to perform at its sole expense all of the
obligations of the Seller to be performed under such Assumed Contract the
benefits of which the Buyer is receiving after the Closing Date.
(c) DELIVERY OF HARDWARE DESIGN AND RELATED MATERIALS. The
Seller expressly agrees that it will promptly, but in any event no later than
two weeks following the Closing Date, deliver to the Buyer all hardware design
and related materials relating to the Wireless Technology, including without
limitation, the RF Module designed under contract by Mr. ▇▇▇▇ ▇▇▇▇▇▇ and the
notes, design specifications and related materials produced by ▇▇. ▇▇▇▇▇▇ and/or
the Seller, as more particularly described in the memo dated April 5, 1999
delivered to the Buyer by ▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇.
(d) INTRODUCTIONS. The Seller agrees to introduce the Buyer to
the Utilities and to Centro de Pesquisas de Energia Eletrica and the other party
or parties, if any, who had expressed an interest in the Wireless Technology, as
soon as practicable, but in no event later than two weeks, following the
Closing.
(e) SURVIVAL. Notwithstanding anything to the contrary
contained in this Agreement, the covenants and agreements described in this
Section 5 shall survive the Closing and continue forever.
6. INDEMNIFICATION.
(a) INDEMNIFICATION OF LOSSES. The Seller hereby
indemnifies the Buyer against Losses (as defined below), and the Buyer hereby
indemnifies the Seller against Losses, as set forth in this Section 6. If the
Buyer shall have suffered a Loss by reason of (i) the breach of any of the
representations or warranties or covenants made by the Seller herein, or (ii)
any liability or claim arising prior to the Closing with respect to the
Acquired Assets, the Buyer shall be indemnified for such Loss by the Seller
as set forth in this Section 6; if the Seller shall have suffered a Loss by
reason of (iii) the breach of any of the representations or warranties or
covenants made by the Buyer herein, (iv) the manufacture or sale of any of
the Acquired Assets by the Buyer after the Closing, or (v) the Assumed
Contracts, the Seller shall be indemnified for such Loss by the Buyer as set
forth in Section 6. The party who is requested to provide indemnity is herein
referred to as "Indemnitor" and the party requesting indemnity is herein
referred to as "Indemnitee." "Loss" shall mean any losses, liabilities,
claims, damages and expenses incurred including, without limitation,
penalties, fines, interest, amounts paid in settlement and reasonable fees
and disbursements of counsel, and reasonable expenses incurred in connection
with any investigation, action, suit or proceeding instituted against
Indemnitee.
(b) PAYMENT. At such time as the indemnifiable amount of a
Loss as been determined in accordance with this Section 6 (a "Liquidated
Claim"), (A) if resulting from a claim made by the Buyer, the Seller shall
immediately pay the Buyer the amount of the Liquidated Claim, or (B) if
resulting from a claim made by the Seller, the Buyer shall immediately pay
the Seller the
-9-
amount of the Liquidated Claim, as the case may be. No forbearance of Indemnitee
in demanding payment from an Indemnitor shall act as a waiver of any right of
Indemnitee to receive payment from Indemnitor, nor shall it relieve Indemnitor
of any obligation to Indemnitee under this Agreement.
(c) NOTICE OF CLAIMS. If Indemnitee has any claim for a Loss
(a "Claim"), it will give prompt written notice thereof to Indemnitor,
including in such notice a brief description of the facts upon which Claim is
based and the amount thereof.
(d) THIRD PARTY CLAIMS. If Indemnitee becomes aware of a
Third Party Claim that it believes may result in a Claim (a "Third Party
Claim"), Indemnitee shall notify Indemnitor of such Third Party Claim, and
Indemnitor shall be entitled, at the expense of Indemnitor, to defend such
Third Party Claim.
(e) DISPUTED CLAIMS. If Indemnitor objects to any Claim or
Third Party Claim, it shall give written notice of such objection and brief
statement of the grounds of such objection to Indemnitee within 20 business days
after notice is received. If no such notice is given, such claim shall be a
Liquidated Claim. If such objection is made, Indemnitor and Indemnitee shall
meet and use their best efforts to settle the dispute in writing which, when
resolved, shall be a Liquidated Claim.
(f) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the parties set forth in this Agreement will
continue for a period of three years from the Closing Date.
7. MISCELLANEOUS.
(a) PRESS RELEASES AND ANNOUNCEMENTS. No party shall issue any
press release or announcement relating to the subject matter of this Agreement
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 law or regulation (in which case the disclosing party will advise the other
party prior to making the disclosure).
(b) 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.
(c) 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, that may have related in any way to the
subject matter hereof, including, without limitation, the Memorandum of
Understanding entered into by and between the parties effective as of January
18, 1999.
(d) 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.
-10-
(e) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) 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.
(g) NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim or other communication hereunder shall be deemed duly given three business
days after mailing if sent by registered or certified mail, return receipt
requested, postage prepaid and addressed to the intended recipient as set forth
below:
If to the Seller:
Greenland Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
If to the Buyer:
Telenetics Corporation
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
With a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Any party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it any is
received by the person for whom it is intended. 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.
(h) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the law of conflicts) of
the State of California.
(i) AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
the Buyer and the Seller.
-11-
(j) EXPENSES. Each of the Buyer and the Seller will bear its
own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
(k) CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party. Any
reference to any federal, state, local or foreign statute or law shall be deemed
also to refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise.
(l) INCORPORATION OF EXHIBITS AND SCHEDULES. The exhibits and
schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(m) BULK TRANSFER LAWS. The Buyer acknowledges that the Seller
will not comply with the provisions of any bulk transfer laws of any
jurisdiction in connection with the transactions contemplated by this Agreement.
The Seller shall indemnify the Buyer for any liability with respect to any such
non-compliance.
[Remainder of page intentionally left blank.]
-12-
(n) TRANSFER TAXES. Any and all sales, use or other transfer
taxes arising from the transactions contemplated by this Agreement will be paid
by the Seller.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
TELENETICS CORPORATION,
a California corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. Armani
------------------------------------------
▇▇▇▇▇▇▇ ▇. Armani, President
GREENLAND CORPORATION,
a Nevada corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇, Chief Executive Officer