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EXHIBIT 10.9
ASSET PURCHASE AGREEMENT
dated October 15, 2007
by and among
BEACON ENTERPRISE SOLUTIONS GROUP, INC.,
STRATEGIC COMMUNICATIONS, LLC
and
all of the Members of Strategic Communications, LLC
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TABLE OF CONTENTS
Page
Exhibits
Exhibit A - Bill of Sale
Exhibit B - Instrument of Assumption
Exhibit C - Opinion of the Seller's counsel
Exhibit D - Escrow Agreement
Schedules
Schedule 1.4(c) - Certain Retained Liabilities
Schedule 1.6 - Allocation of Purchase Price
Schedule 3.7 - Ownership and Management
Schedule 4.2 - Assumption of Liabilities
Schedule 6.9 - Employees to Be Offered Employment by the
Buyer
Disclosure Schedule
(i)
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into as of October 15,
2007 by
and among BEACON ENTERPRISE SOLUTIONS GROUP, INC., an Indiana
corporation (the
"Buyer"), STRATEGIC COMMUNICATIONS, LLC, a Kentucky limited
liability company
("Strategic" or the "Seller") and the members of the Seller
(collectively, the
"Members").
This Agreement contemplates a transaction in which the Buyer
will purchase
substantially all of the assets (including without limitation
inventory and
equipment, but excluding accounts receivable) and assume certain
of the
liabilities of the Seller (the "Assumed Liabilities" as defined
in Article IX,
below).
Contemporaneously with the execution and delivery of this
Agreement, the
Buyer, RFK Communications, LLC, and the members of RFK
Communications, LLC,
shall enter into an Asset Purchase Agreement (the "RFK Purchase
Agreement").
Capitalized terms used in this Agreement shall have the meanings
ascribed
to them in Article IX.
In consideration of the representations, warranties and
covenants herein
contained, the Parties agree as follows.
ARTICLE I
THE ASSET PURCHASE
1.1 Purchase and Sale of Assets.
(a) Upon and subject to the terms and conditions of this
Agreement,
the Buyer shall purchase from the Seller, and the Seller shall
sell, transfer,
convey, assign and deliver to the Buyer, at the Closing, for the
consideration
specified below in this Article I, all right, title and interest
in, to and
under the Acquired Assets.
(b) Notwithstanding the provisions of Section 1.1(a), the
Acquired
Assets shall not include the Excluded Assets.
1.2 Assumption of Liabilities.
(a) Upon and subject to the terms and conditions of this
Agreement,
the Buyer shall assume and become responsible for, from and
after the Closing,
the Assumed Liabilities. In no event shall the amount of
accounts payable and
other payment obligations under the Assigned Contracts accrued
as of the date of
the Closing exceed $500,000.00. The liabilities of the Seller
that are not
Assumed Liabilities shall remain Retained Liabilities.
(b) Notwithstanding the terms of Section 1.2(a) or any other
provision of this Agreement to the contrary, the Buyer shall not
assume or
become responsible for, and the Seller shall remain liable for,
the Retained
Liabilities.
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1.3 Purchase Price. The Purchase Price to be paid by the Buyer
for the
Acquired Assets shall be (a) $562,500.00 in cash (the "Cash
Consideration"), and
(b) 200,000 shares (the "Shares") of Buyer Common Stock.
1.4 Escrow.
(a) At the Closing, the Buyer shall deliver to the Escrow
Agent
$330,000 of the Cash Consideration and a stock certificate
registered in the
name of the Escrow Agent or its nominee representing the Escrow
Shares for the
purpose of securing the indemnification obligations of the
Seller and the
Members set forth in this Agreement. The Escrow Fund shall be
held by the Escrow
Agent under the Escrow Agreement pursuant to the terms thereof.
The Escrow Fund
shall be held as a trust fund and shall not be subject to any
lien, attachment,
trustee process or any other judicial process of any creditor of
any party, and
shall be held and disbursed solely for the purposes of and in
accordance with
the terms of the Escrow Agreement.
(b) Until the termination of the escrow in accordance with the
terms
of the Escrow Agreement, the Seller shall have the right, in its
sole discretion
to direct the sale for cash of all or any portion of the Escrow
Shares (if any
then make up a portion of the Escrow Fund) in one or more
transactions provided
that (i) the price per share for the sale of the Escrow Shares
is not less than
$1.00, (ii) the proceeds from any such sale(s) shall be held in
escrow by the
Escrow Agent pursuant to the terms of the Escrow Agreement, and
(iii) the Seller
may not direct any such sale during any blackout period under
any insider
trading policy or blackout policy of the Buyer, and the Buyer
shall promptly
execute any and all required joint instructions to the Escrow
Agent to
facilitate any and all such sales of the Escrow Shares. Further,
the Seller
shall have the sole discretion to direct the investment of
amounts held in the
Escrow Fund pursuant to the investment options specified in, and
in accordance
with the restrictions of, the Escrow Agreement, and Buyer agrees
to promptly
execute any and all joint instructions to the Escrow Agent to
facilitate any and
all such investments.
(c) Upon the payment and satisfaction by the Seller of those
Retained Liabilities listed on Schedule 1.4(c) attached hereto,
the Buyer shall
authorize the Escrow Agent to release such amounts of cash and
shares from the
Escrow Fund as the Buyer and the Seller may at such time agree.
The Buyer and
the Seller may at any time authorize the Escrow Agent to
distribute amounts of
cash and shares from the Escrow Fund to pay and satisfy any
Retained
Liabilities, and the Buyer shall have no liability to the Seller
or the Members
with respect to the amounts so distributed.
(d) Notwithstanding any of the foregoing, on the date that is
ninety
(90) days after the date of Closing, the Buyer shall have the
right to authorize
the Escrow Agent to distribute such amounts from the Escrow Fund
to any creditor
of the Seller that holds a Security Interest in any of the
Acquired Assets
(specifically including the Internal Revenue Service and the
Kentucky Department
of Revenue), other than any creditor associated with the Assumed
Liabilities to
the extent of such Assumed Liabilities, as may be required to
release the
Acquired Assets from such Security Interest, and the Buyer shall
have no
liability to the Seller or the Members with respect to the
amounts so
distributed.
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1.5 The Closing.
(a) The Closing shall take place at the offices of Frost Brown
Todd
LLC in Louisville, Kentucky commencing at 9:00 a.m. local time
on the Closing
Date, or at such other place as the parties may mutually agree.
All transactions
at the Closing shall be deemed to take place simultaneously, and
no transaction
shall be deemed to have been completed and no documents or
certificates shall be
deemed to have been delivered until all other transactions are
completed and all
other documents and certificates are delivered.
(b) At the Closing:
(i) the Seller shall deliver to the Buyer the various
certificates, instruments and documents referred to in Section
5.1;
(ii) the Buyer shall deliver to the Seller the various
certificates, instruments and documents referred to in Section
5.2;
(iii) the Seller shall execute and deliver to the Buyer a
bill
of sale in substantially the form attached hereto as Exhibit A
and such other
instruments of conveyance as the Buyer may reasonably request in
order to effect
the sale, transfer, conveyance and assignment to the Buyer of
valid ownership of
the Acquired Assets;
(iv) the Buyer shall execute and deliver to the Seller an
instrument of assumption in substantially the form attached
hereto as Exhibit B
and such other instruments as the Seller may reasonably request
in order to
effect the assumption by the Buyer of the Assumed
Liabilities;
(v) the Buyer shall pay to the Seller, payable by wire
transfer or other delivery of immediately available U.S. funds
to an account
designated by the Seller the Cash Consideration, minus the
amount placed in
escrow pursuant to Section 1.4(a) above;
(vi) the Buyer shall deliver to the Seller a stock
certificate
registered in the name of the Seller representing a number of
shares of Buyer
Common Stock as is equal to the number of Shares minus the
number of Escrow
Shares;
(vii) the Buyer, the Seller and the Escrow Agent shall
execute
and deliver the Escrow Agreement in substantially the form
attached hereto as
Exhibit D and the Buyer shall deposit the amount of cash to be
placed in escrow
(as set forth in Section 1.4(a) above) and a stock certificate
representing the
Escrow Shares with the Escrow Agent in accordance with Section
1.4;
(viii) the Seller shall deliver to the Buyer, or otherwise
put
the Buyer in possession and control of, all of the Acquired
Assets of a tangible
nature; and
(ix) the Buyer and the Seller shall execute and deliver to
each other a cross-receipt evidencing the transactions referred
to above.
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1.6 Allocation. The Buyer and the Seller agree to allocate the
Purchase
Price (and all other capitalizable costs) among the Acquired
Assets and the
non-solicitation and non-competition covenants set forth in
Sections 6.2 and 6.3
for all purposes (including financial accounting and tax
purposes) in accordance
with the allocation schedule attached hereto as Schedule 1.6.
Seller and Buyer
agree to use the allocations determined pursuant to this Section
1.6 for all tax
purposes, including without limitation, those matters subject to
Section 1060 of
the Code, and the Treasury regulations promulgated thereunder.
Buyer and the
Seller shall prepare and submit to the other for review their
IRS Forms 8594
within ninety (90) days after Closing. Each party shall have
thirty (30) days to
complete its review.
1.7 Further Assurances. At any time and from time to time after
the
Closing, at the request of the Buyer and without further
consideration, the
Seller shall execute and deliver such other instruments of sale,
transfer,
conveyance and assignment and take such actions as the Buyer may
reasonably
request to more effectively transfer, convey and assign to the
Buyer, and to
confirm the Buyer's rights to, title in and ownership of, the
Acquired Assets
and to place the Buyer in actual possession and operating
control thereof.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer that, except as
set forth
in the Disclosure Schedule, the statements contained in this
Article II are true
and correct as of the date of this Agreement and will be true
and correct as of
the Closing as though made as of the Closing, except to the
extent such
representations and warranties are specifically made as of a
particular date (in
which case such representations and warranties will be true and
correct as of
such date). The Disclosure Schedule shall be arranged in
sections and
subsections corresponding to the numbered and lettered sections
and subsections
contained in this Article II. Disclosures in any section or
subsection of the
Disclosure Schedule shall qualify such other sections or
subsections of the
Disclosure Schedule to the extent it is reasonably apparent from
the content of
such disclosure that such disclosure is relevant to such other
sections or
subsections.
2.1 Organization, Qualification and Corporate Power. The Seller
is a
limited liability company validly existing and in good standing
under the laws
of the Commonwealth of Kentucky. The Seller is duly qualified to
conduct
business and is in good standing under the laws of each
jurisdiction listed in
Section 2.1 of the Disclosure Schedule, which jurisdictions
constitute the only
jurisdictions in which the nature of the Seller's business or
the ownership or
leasing of their properties requires such qualification. The
Seller has all
requisite power and authority to carry on the business in which
it is engaged
and to own and use the properties owned and used by it. The
Seller has furnished
to the Buyer complete and accurate copies of its Articles of
Organization, as
amended, and its Operating Agreement. The Seller is not in
default under or in
violation of any provision of its Articles of Organization, as
amended, or its
Operating Agreement. There are no other agreements or
instruments setting forth
(i) rights, preferences and privileges of the Members with
respect to the Seller
and/or among the Members, or (ii) matters relating to the
operation and
governance of the Seller.
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2.2 Capitalization. Section 2.2 of the Disclosure Schedule sets
forth a
complete and accurate list, as of the date of this Agreement, of
(i) all
Members, indicating the number of shares or membership interests
or units, as
applicable, of the Seller held by each Member and (ii) all
outstanding options,
warrants or other instruments giving any party the right to
acquire any shares,
membership interests or units or equity securities of the
Seller. There are no
outstanding agreements or commitments to which the Seller is a
party or which
are binding upon the Seller for the redemption of any of its
equity. The Seller
has only one class of shares outstanding. There are no
outstanding options,
warrants or similar rights relating to the Seller or its
respective equity
securities.
2.3 Authorization of Transaction. The Seller has all requisite
power and
authority to execute and deliver this Agreement and the
Ancillary Agreements and
to perform its obligations hereunder and thereunder. The
performance by the
Seller of this Agreement and the Ancillary Agreements and the
consummation by
the Seller of the transactions contemplated hereby and thereby
have been duly
and validly authorized by all necessary actions on the part of
the Seller.
This Agreement has been duly and validly executed and delivered
by the
Seller and constitutes, and each of the Ancillary Agreements,
upon its execution
and delivery by the Seller, will constitute, a valid and binding
obligation of
the Seller, enforceable against the Seller in accordance with
its terms, except
as enforceability may be limited by bankruptcy, insolvency,
reorganization,
moratorium, arrangement or other similar laws from time to time
in effect and
except as to the remedy of specific performance which may not be
available under
the laws of various jurisdictions.
2.4 Noncontravention. Neither the execution and delivery by the
Seller of
this Agreement or the Ancillary Agreements, nor the consummation
by the Seller
of the transactions contemplated hereby or thereby, will (a)
conflict with or
violate any provision of the Articles of Organization or
Operating Agreement of
the Seller, (b) require on the part of the Seller any notice to
or filing with,
or any permit, authorization, consent or approval of, any
Governmental Entity,
(c) conflict with, result in a breach of, constitute (with or
without due notice
or lapse of time or both) a default under, result in the
acceleration of
obligations under, create in any party the right to terminate,
modify or cancel,
or require any notice, consent or waiver under, any contract or
instrument to
which the Seller is a party or by which the Seller is bound or
to which any of
its assets is subject, except with respect to contracts that are
not customer
contracts listed on Section 2.4 of the Disclosure Schedules, for
any such
conflict, breach, default, acceleration, or right to terminate,
modify or
cancel, or failure to notify or obtain consent or waiver that
would not have a
Seller Material Adverse Effect, (d) result in the imposition of
any Security
Interest upon any asset or assets of the Seller or (e) violate
any order, writ,
injunction, decree, statute, rule or regulation applicable to
the Seller or any
of its properties or assets.
2.5 Subsidiaries. The Seller has no Subsidiaries. The Seller
does not
control directly or indirectly or have any direct or indirect
equity
participation or similar interest in any corporation,
partnership, limited
liability company, joint venture, trust or other business
association or entity.
2.6 Financial Statements. The Seller has provided to the Buyer
the
Financial Statements. The Financial Statements (i) were prepared
on a consistent
basis throughout the
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periods covered thereby (except as may be indicated in the notes
to such
financial statements) and, in the case of the balance sheet and
statement of
income, changes in members' equity and cash flows of the Seller
as of the end of
and for the year ended June 30, 2007, in accordance with
reasonable accounting
practices, and (ii) fairly and accurately present the financial
position of the
Seller as of the dates thereof and the results of its operations
and cash flows
for the periods indicated, consistent with the books and records
of the Seller,
except that the unaudited interim financial statements are
subject to normal and
recurring year-end adjustments which will not be material in
amount or effect
and do not include footnotes. The parties acknowledge and agree
that the
financial statements of the Seller that are being audited by the
Buyer's
accountants shall supersede the unaudited Financial Statements
for all purposes,
upon the review and approval of such audited financial
statements by the Buyer.
2.7 Absence of Certain Changes. Except as set forth in Section
2.7 of the
Disclosure Schedules, since the Most Recent Balance Sheet Date,
(a) there has
occurred no event or development which, individually or in the
aggregate, has
had, or could reasonably be expected to have in the future, a
Seller Material
Adverse Effect, and (b) the Seller has not taken any of the
actions set forth in
paragraphs (a) through (n) of Section 4.4.
2.8 Undisclosed Liabilities. The Seller has no knowledge of any
liability
(whether known or unknown to the Buyer, whether absolute or
contingent, whether
liquidated or unliquidated and whether due or to become due),
except for (a)
liabilities shown on the Most Recent Balance Sheet, (b)
contractual and other
liabilities incurred in the Ordinary Course of Business which
are not required
by GAAP to be reflected on a balance sheet and which are not
material, and (c)
liabilities which have arisen since the Most Recent Balance
Sheet Date in the
Ordinary Course of Business and which are listed on Schedule
2.8.
2.9 Tax Matters.
(a) Except as set forth on Schedule 2.9(a), the Seller has:
(i)
properly filed all material Tax Returns that it is and was
required to file, and
all such Tax Returns were true, correct and complete in all
material respects;
(ii) has properly paid on a timely basis all material Taxes,
whether or not
shown on its Tax Returns, that were due and payable; has
withheld or collected
all material Taxes that the Seller is or was required by law to
withhold or
collect and, to the extent required, have been properly paid on
a timely basis
to the appropriate Governmental Entity; and (iv) has complied
with all
information reporting and back-up withholding requirements in
all material
respects, including maintenance of the required records with
respect thereto, in
connection with amounts paid to any employee, independent
contractor, creditor
or other third party.
(b) The unpaid Taxes of the Seller for periods through the date
of
the Most Recent Balance Sheet Date do not materially exceed the
accruals and
reserves for Taxes (excluding accruals and reserves for deferred
Taxes
established to reflect timing differences between book and Tax
income) set forth
on the Most Recent Balance Sheet. All Taxes attributable to the
period from and
after the Most Recent Balance Sheet Date and continuing through
the Closing Date
are, or will be, attributable to the conduct by the Seller of
its operations in
the Ordinary Course of Business.
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(c) No examination or audit of any Tax Return of the Seller by
any
Governmental Entity is currently in progress or, to the
knowledge of the Seller,
threatened or contemplated. Section 2.9(c) of the Disclosure
Schedule sets forth
each jurisdiction (other than United States federal) in which
the Seller files,
or is required to file or has been required to file a material
Tax Return or is
or has been liable for material Taxes on a "nexus" basis. The
Seller has not
been informed by any jurisdiction that the jurisdiction believes
that the Seller
was required to file any Tax Return that was not filed.
(d) Strategic is, and has been since its inception, validly
classified and treated as a "partnership" for federal income tax
purposes and
has been validly treated in a similar manner for purposes of the
income Tax laws
of all states in which it has been subject to taxation.
(e) Except as set forth in Section 2.9(e) of the Disclosure
Schedules, the Seller has delivered or made available to the
Buyer (i) complete
and correct copies of all Tax Returns relating to Taxes for all
Taxable periods
ending December 31, 2006, 2005 and 2004 and (ii) complete and
correct copies of
all private letter rulings, revenue agent reports, information
document
requests, notices of assessment, notices of proposed
deficiencies, deficiency
notices, protests, petitions, closing agreements, settlement
agreements, pending
ruling requests and any similar documents submitted by, received
by or agreed to
by or on behalf of the Seller relating to Taxes for all Taxable
periods for
which the applicable statute of limitations has not yet
expired.
(f) Except as disclosed on Schedule 2.9(f) of the Disclosure
Schedule, the Seller has not (i) waived any statute of
limitations with respect
to Taxes or agreed to extend the period for assessment or
collection of any
Taxes, (ii) requested any extension of time within which to file
any Tax Return,
which Tax Return has not yet been filed, or (iii) executed or
filed any power of
attorney relating to Taxes with any Governmental Entity.
(g) The Seller is not a party to any litigation regarding
Taxes.
(h) Except as disclosed on Schedule 2.9(h) of the Disclosure
Schedule, (i) there are no Security Interests with respect to
Taxes upon any of
the Acquired Assets, other than with respect to Taxes not yet
due and payable;
and (ii) to the Seller's and Members' knowledge, there is no
basis for the
assertion of any claim relating or attributable to Taxes, which,
if adversely
determined, would result in any Security Interest on the
Acquired Assets, or
would reasonably be expected to have, individually or in the
aggregate, a Seller
Material Adverse Effect.
(i) None of the Acquired Assets (i) is property that is required
to
be treated as being owned by any other person pursuant to the
provisions of
former Section 168(f)(8) of the Internal Revenue Code of 1954,
or (ii) is "tax
exempt use property" within the meaning of Section 168(h) of the
Code.
(j) The Seller has maintained complete and accurate records,
including all applicable exemption, resale or other
certificates, of (i) all
sales to purchasers claiming to be exempt from sale and use
Taxes based on the
exempt status of the purchaser, and (ii) all other sales for
which sales Tax or
use Tax was not collected by the Seller and as to which the
seller is required
to receive and retain resale certificates or other certificates
relating to the
exempt nature of the sale or use or non-applicability of the
sale and use Taxes.
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(k) The Seller is not bound by any Tax indemnity, Tax sharing or
Tax
allocation agreement.
(l) The Seller is not a "foreign person" within the meaning
of
Section 1445 of the Code.
2.10 Ownership and Condition of Assets.
(a) Except as disclosed on Section 2.10(a) of the Disclosure
Schedule, the Seller is the true and lawful owner, and has good
title to, all of
the Acquired Assets, free and clear of all Security Interests.
Upon execution
and delivery by the Seller to the Buyer of the instruments of
conveyance
referred to in Section 1.5(b)(iii), the Buyer will become the
true and lawful
owner of, and will receive good title to, the Acquired Assets,
free and clear of
all Security Interests, except for Security Interests created by
the Buyer or
permitted under the Escrow Agreement.
(b) The Acquired Assets are sufficient for the conduct of
the
Seller's business as presently conducted and as presently
proposed to be
conducted and constitute all assets used by the Seller in such
business. Each
depreciable tangible Acquired Asset is free from material
defects, has been
maintained in accordance with normal industry practice, is in
good operating
condition and repair (subject to normal wear and tear) and is
suitable for the
purposes for which it presently is used.
(c) Section 2.10(c) of the Disclosure Schedule lists
individually
(i) all Acquired Assets which are fixed assets (within the
meaning of GAAP)
having a book value greater than $1,000, indicating the cost,
accumulated book
depreciation (if any) and the net book value of each such fixed
asset as of the
Most Recent Balance Sheet Date, (ii) all other Acquired Assets
of a tangible
nature (other than inventories) whose net book value exceeds
$5,000; and (iii)
all Acquired Assets that are Assigned Contracts and specifically
identifying all
customer contracts.
(d) Except as disclosed on Section 2.l0(d) of the Disclosure
Schedule, each item of equipment, motor vehicle and other asset
that is being
transferred to the Buyer as part of the Acquired Assets and that
the Seller has
possession of pursuant to a lease agreement or other contractual
arrangement is
in such condition that, if returned to its lessor or owner under
the applicable
lease or contract on the Closing Date, the obligations of the
Seller to such
lessor or owner would have been discharged in full.
(e) Section 2.10(e) of the Disclosure Schedule describes the
inventory held by the Seller. All items included in the
inventory consist of a
quality and quantity usable and, with respect to finished goods,
saleable, in
the ordinary course of business of the Seller except for
obsolete items and
items of below-standard quality, all of which have been written
off or written
down to net realizable value on the balance sheets in the
Financial Statements
or on the accounting records of the Seller as of the Closing
Date, as the case
may be. Seller is not in possession of any inventory not owned
by Seller,
including goods already sold.
2.11 Owned Real Property. The Seller does not own, and has never
owned,
any real property.
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2.12 Real Property Leases. Section 2.12 of the Disclosure
Schedule lists
all Leases and lists the term of such Lease, any extension and
expansion
options, and the rent payable thereunder. The Seller has
delivered to the Buyer
complete and accurate copies of the Leases. With respect to each
Lease and
except as set forth in Section 2.12 of the Disclosure
Schedule:
(a) such Lease is legal, valid, binding, enforceable and in
full
force and effect;
(b) such Lease is assignable by the Seller to the Buyer without
the
consent or approval of any party and such Lease will continue to
be legal,
valid, binding, enforceable and in full force and effect
immediately following
the Closing in accordance with the terms thereof as in effect
immediately prior
to the Closing;
(c) neither the Seller nor, to the knowledge of the Seller,
any
other party, is in breach or violation of, or default under, any
such Lease, and
no event has occurred, is pending or, to the knowledge of the
Seller, is
threatened, which, after the giving of notice, with lapse of
time, or otherwise,
would constitute a material breach or default by the Seller or,
to the knowledge
of the Seller, any other party under such Lease;
(d) the Seller is not a party to any dispute, oral agreement
or
forbearance program as to such Lease, and to Seller's knowledge
no other person
is party to such dispute, oral agreement or forbearance program
relating to or
affecting the Lease;
(e) the Seller has not assigned, transferred, conveyed,
mortgaged,
deeded in trust or encumbered any interest in the leasehold or
subleasehold;
(f) to the knowledge of the Seller, all facilities leased or
subleased thereunder are supplied with utilities and other
services adequate for
the operation of said facilities; and
(g) the Seller is not aware of any Security Interest,
easement,
covenant or other restriction applicable to the real property
subject to such
Lease which would reasonably be expected to materially impair
the current uses
or the occupancy by the Seller of the property subject
thereto.
2.13 Intellectual Property.
(a) Except for the confidential business information of the
Seller,
which has been disclosed to the Buyer, there is no Seller
Intellectual Property.
(b) Certifications. Section 2.13(b) of the Disclosure
Schedule
identifies all channel partner authorizations, accreditations or
similar
qualifications with third party technology providers held by the
Seller or their
employees.
(c) Websites, Phone Numbers, etc. Section 2.13(c) of the
Disclosure
Schedule identifies all websites, phone numbers, IP and web
addresses, and
uniform resource locators (URLs) used by the Seller. Except as
disclosed on
Section 2.13(c), all such websites, phone numbers, IP and web
addresses, and
uniform resource locators (URLs) may be transferred or assigned
to the Buyer
without the consent of such third parties.
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2.14 Contracts.
(a) Section 2.14 of the Disclosure Schedule lists the
following
agreements (written or oral) to which the Seller is a party as
of the date of
this Agreement (other than this Agreement and the Ancillary
Agreements):
(i) any agreement (or group of related agreements) for the
lease of personal property from or to third parties providing
for lease payments
in excess of $5,000 per annum or having a remaining term longer
than three
months;
(ii) any agreement (or group of related agreements) for the
purchase or sale of products or for the furnishing or receipt of
services (A)
which calls for performance over a period of more than one year,
(B) which
involves more than the sum of $5,000, or (C) in which the Seller
has granted
manufacturing rights, "most favored nation" pricing provisions
or marketing or
distribution rights relating to any products or territory or has
agreed to
purchase a minimum quantity of goods or services or has agreed
to purchase goods
or services exclusively from a certain party;
(iii) any agreement concerning the establishment or
operation
of a partnership, joint venture or limited liability
company;
(iv) any agreement (or group of related agreements) under
which it has created, incurred, assumed or guaranteed (or may
create, incur,
assume or guarantee) indebtedness (including capitalized lease
obligations)
involving more than $5,000 or under which it has imposed (or may
impose) a
Security Interest on any of its assets, tangible or
intangible;
(v) any agreement for the disposition of any significant
portion of the assets or business of the Seller (other than
sales of products in
the Ordinary Course of Business) or any agreement for the
acquisition of the
assets or business of any other entity (other than purchases of
inventory or
components in the Ordinary Course of Business);
(vi) any agreement concerning exclusivity or
confidentiality;
(vii) any employment or consulting agreement;
(viii) any agreement involving any current or former
officer,
manager or Member or an Affiliate thereof;
(ix) any agreement under which the consequences of a default
or termination would reasonably be expected to have a Seller
Material Adverse
Effect;
(x) any agreement which contains any provisions requiring
the
Seller to indemnify any other party (excluding indemnities
contained in
agreements for the purchase, sale or license of products entered
into in the
Ordinary Course of Business);
(xi) any agreement that could reasonably be expected to have
the effect of prohibiting or impairing the conduct of the
business of the Seller
or of the Buyer or any of its subsidiaries as currently
conducted and as
currently proposed to be conducted;
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(xii) any agreement under which the Seller is restricted
from
selling, licensing or otherwise distributing any of its
technology or products,
or providing services to, customers or potential customers or
any class of
customers, in any geographic area, during any period of time or
any segment of
the market or line of business;
(xiii) any agreement which would entitle any third party to
receive a license or any other right to intellectual property of
the Buyer or
any of the Buyer's Affiliates following the Closing; and
(xiv) any other agreement (or group of related agreements)
either involving more than $10,000 or not entered into in the
Ordinary Course of
Business.
(b) The Seller has delivered to the Buyer a complete and
accurate
copy of each agreement listed in Section 2.13 or Section 2.14 of
the Disclosure
Schedule. With respect to each agreement so listed and except as
disclosed in
Section 2.14 of the Disclosure Schedules: (i) the agreement is
legal, valid,
binding and enforceable and in full force and effect; (ii) for
those agreements
to which the Seller is a party, the agreement is assignable by
the Seller to the
Buyer without the consent or approval of any party and will
continue to be
legal, valid, binding and enforceable and in full force and
effect immediately
following the Closing in accordance with the terms thereof as in
effect
immediately prior to the Closing; and (iii) neither the Seller
nor, to the
knowledge of the Seller, any other party, is in breach or
violation of, or
default under, any such agreement, and no event has occurred, is
pending or, to
the knowledge of the Seller, is threatened, which, after the
giving of notice,
with lapse of time, or otherwise, would constitute a breach or
default by the
Seller or, to the knowledge of the Seller, any other party under
such agreement.
(c) The Assigned Contracts shall be listed as such on Section
2.14
of the Disclosure Schedule, which may be amended at the time of
Closing. The
Assigned Contracts shall include no more than $500,000 of
accounts payable and
other payment obligations of the Seller accrued as of the time
of the Closing.
2.15 Accounts Receivable. All accounts receivable of the Seller
reflected
on the Most Recent Balance Sheet (other than those paid since
such date) are
valid receivables subject to no setoffs or counterclaims and are
current and
collectible (within 90 days after the date on which it first
became due and
payable), net of the applicable reserve for bad debts on Section
2.15 of the
Disclosure Schedule. A complete and accurate list of the
accounts showing the
aging thereof is included in Section 2.15 of the Disclosure
Schedule.
2.16 Insurance. Section 2.16 of the Disclosure Schedule lists
each
insurance policy (including fire, theft, casualty, comprehensive
general
liability, workers compensation, business interruption,
environmental, product
liability, errors and omissions, professional liability, and
automobile
insurance policies and bond and surety arrangements) to which
the Seller is a
party, all of which are in full force and effect. There is no
material claim
pending under any such policy as to which coverage has been
questioned, denied
or disputed by the underwriter of such policy. Except with
respect to workers
compensation insurance (which remains subject to statutory or
regulatory
assessment), all premiums due and payable under all such
policies have been
paid, the Seller may not be liable for retroactive premiums or
similar payments,
and the
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Seller is otherwise in compliance in all material respects with
the terms of
such policies. The Seller has no knowledge of any threatened
termination of, or
premium increase with respect to, any such policy. Upon payment
of amounts
required to obtain tail coverage on Seller's professional
liability (errors and
omissions) insurance policy, if any, such policy will be in full
force and
effect immediately following the Closing in accordance with the
terms thereof as
in effect immediately prior to the Closing.
2.17 Litigation. Except as set forth in Section 2.17 of the
Disclosure
Schedule, there is no Legal Proceeding which is pending or has
been threatened
in writing against the Seller. There are no judgments, orders or
decrees
outstanding against the Seller.
2.18 Warranties. Except as set forth in Section 2.18 of the
Disclosure
Schedule, no service or product delivered, made, sold, leased or
licensed by the
Seller is subject to any guaranty, warranty, right of return,
right of credit or
other indemnity.
2.19 Employees.
(a) Section 2.19 of the Disclosure Schedule contains a list of
all
employees of the Seller, their position with the Seller and
their annual rate of
compensation. Except as set forth on Section 2.19 of the
Disclosure Schedule,
each current employee of the Seller and each past employee of
the Seller has
entered into a confidentiality agreement with the Seller, a copy
or form of
which has previously been delivered to the Buyer. Section 2.19
of the Disclosure
Schedule contains a list of all employees of the Seller who are
a party to a
non-competition agreement with the Seller; copies of such
agreements have
previously been delivered to the Buyer. Each such agreement
referenced in the
two preceding sentences to which the Seller is a party is
assignable by the
Seller to the Buyer without the consent or approval of any party
and will
continue to be legal, valid, binding and enforceable and in full
force and
effect immediately following the Closing in accordance with the
terms thereof as
in effect immediately prior to the Closing. Section 2.19 of the
Disclosure
Schedule contains a list of all employees of the Seller who are
not citizens of
the United States. To the knowledge of the Seller, no key
employee or group of
employees has any plans to terminate employment with the Seller
(other than for
the purpose of accepting employment with the Buyer following the
Closing) or not
to accept employment with the Buyer. The Seller is in compliance
with all
applicable laws relating to the hiring and employment of
employees.
(b) Neither of the Seller is a party to or bound by any
collective
bargaining agreement, nor has it experienced any strikes,
grievances, claims of
unfair labor practices or other collective bargaining disputes.
The Seller has
no knowledge of any organizational effort made or threatened,
either currently
or within the past two years, by or on behalf of any labor union
with respect to
employees of the Seller.
2.20 Employee Benefits.
(a) There are no Seller Plans. Neither the Seller nor any
ERISA
Affiliate has ever maintained an Employee Benefit Plan subject
to Section 412 of
the Code or Title IV of ERISA. At no time has the Seller or any
ERISA Affiliate
been obligated to contribute to any "multiemployer plan" (as
defined in Section
4001(a)(3) of ERISA).
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<PAGE>
(b) Section 2.20(b) of the Disclosure Schedule discloses each:
(i)
agreement with any Member, manager, executive officer or other
key employee of
the Seller (A) the benefits of which are contingent, or the
terms of which are
altered, upon the occurrence of a transaction involving the
Seller of the nature
of any of the transactions contemplated by this Agreement, (B)
providing any
term of employment or compensation guarantee or (C) providing
severance benefits
or other benefits after the termination of employment of such
manager, executive
officer or key employee; (ii) agreement, plan or arrangement
under which any
person may receive payments from the Seller that may be subject
to the tax
imposed by Section 4999 of the Code or included in the
determination of such
person's "parachute payment" under Section 280G of the Code; and
(iii) agreement
or plan binding the Seller, including any stock option plan,
stock appreciation
right plan, restricted stock plan, stock purchase plan,
severance benefit plan
or Seller Plan, any of the benefits of which will be increased,
or the vesting
of the benefits of which will be accelerated, by the occurrence
of any of the
transactions contemplated by this Agreement or the value of any
of the benefits
of which will be calculated on the basis of any of the
transactions contemplated
by this Agreement.
(c) Section 2.20(c) of the Disclosure Schedule sets forth the
policy
of the Seller with respect to accrued vacation, accrued sick
time and earned
time off and the amount of such liabilities as of August 31,
2007.
2.21 Environmental Matters.
(a) To its knowledge, the Seller has complied with all
applicable
Environmental Laws except where failure to do so would not have
a Seller
Material Adverse Effect. There is no pending or, to the
knowledge of the Seller,
threatened civil or criminal litigation, written notice of
violation, formal
administrative proceeding, or investigation, inquiry or
information request by
any Governmental Entity, relating to any Environmental Law
involving the Seller.
(b) To its knowledge, the Seller does not have any liabilities
or
obligations arising from the release of any Materials of
Environmental Concern
into the environment.
(c) The Seller is not a party to or bound by any court
order,
administrative order, consent order or other agreement with any
Governmental
Entity entered into in connection with any legal obligation or
liability arising
under any Environmental Law.
(d) The Seller does not have possession of, or access to, or
knowledge of, any documents (whether in hard copy or electronic
form) that
contain any environmental reports, investigations and audits
relating to
premises currently or previously owned or operated by the Seller
(whether
conducted by or on behalf of the Seller or a third party, and
whether done at
the initiative of the Seller or directed by a Governmental
Entity or other third
party).
(e) The Seller is not aware of any material environmental
liability
of any solid or hazardous waste transporter or treatment,
storage or disposal
facility that has been used by the Seller.
2.22 Legal Compliance. Except as set forth in Section 2.22 of
the
Disclosure Schedule, the Seller is currently conducting, and has
at all times
conducted, its business in material compliance
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with each applicable law (including rules and regulations
thereunder) of any
federal, state, local or foreign government, or any Governmental
Entity, and the
Seller has had valid Permits to conduct such business with
respect to each
jurisdiction (and at such times) for which it has been required
to have such
Permits except where the lack of any such Permit would not have
a Seller
Material Adverse Effect. The Seller has not received any notice
or communication
from any Governmental Entity alleging noncompliance with any
applicable law,
rule or regulation.
2.23 Customers and Suppliers. Section 2.23 of the Disclosure
Schedule sets
forth a list of (a) each customer or supplier arrangement that
accounted for
more than 1% of the revenues of the Seller during the last full
fiscal year or
the interim period through the Most Recent Balance Sheet Date
and the amount of
revenues accounted for by such customer or supplier arrangement
during each such
period and (b) each other supplier of services or goods that is
a critical or
sole supplier of any significant aspect of the Seller's
business. No person
identified in the foregoing sentence has provided written or
verbal notice to
the Seller within the past year that it will stop, or materially
reduce its
activity below historic levels in connection with any contract
or arrangement on
which the Seller currently derives revenue.
2.24 Permits. Section 2.24 of the Disclosure Schedule sets forth
a list of
all Permits issued to or held by the Seller. Such listed Permits
are the only
Permits that are required for the Seller to conduct its business
as presently
conducted or as proposed to be conducted. Each such Permit is in
full force and
effect; the Seller is in material compliance with the terms of
each such Permit;
and, to the knowledge of the Seller, no suspension or
cancellation of such
Permit is threatened.
2.25 Certain Business Relationships With Affiliates. No
Affiliate of the
Seller (a) owns any property or right, tangible or intangible,
which is used in
the business of the Seller, (b) has any claim or cause of action
against the
Seller, or (c) owes any money to, or is owed any money by, the
Seller. Section
2.25 of the Disclosure Schedule describes any transactions or
relationships
between the Seller and any Affiliate thereof which occurred or
have existed
since the beginning of the time period covered by the Financial
Statements.
2.26 Brokers' Fees. The Seller does not have any liability or
obligation
to pay any fees or commissions to any broker, finder or agent
with respect to
the transactions contemplated by this Agreement.
2.27 [RESERVED]
2.28 Disclosure. No representation or warranty by the Seller
contained in
this Agreement, and no statement contained in the Disclosure
Schedule or any
other document, certificate or other instrument delivered or to
be delivered by
or on behalf of the Seller pursuant to this Agreement, contains
or will contain
any untrue statement of a material fact or omits or will omit to
state any
material fact necessary, in light of the circumstances under
which it was or
will be made, in order to make the statements herein or therein
not misleading.
2.29 Projections. The projections included in Section 2.29 of
the
Disclosure Schedule were prepared by the Seller in good faith
and represent
their management's good faith estimates of the future
performance of the Seller
for the periods referred to therein. The Buyer
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<PAGE>
acknowledges that the projections are estimates and the Seller
makes no
representation or warranty as to actual future performance.
2.30 Government Contracts.
(a) The Seller has not been suspended or debarred from bidding
on
contracts or subcontracts with any Governmental Entity; and to
Seller's
knowledge no such suspension or debarment has been threatened or
initiated; and
the consummation of the transactions contemplated by this
Agreement will not
result in any such suspension or debarment of the Seller or the
Buyer (assuming
that no such suspension or debarment will result solely from the
identity of the
Buyer). The Seller has not been nor are now being audited or
investigated by the
United States Government Accounting Office, the United States
Department of
Defense or any of its agencies, the Defense Contract Audit
Agency, the
contracting or auditing function of any Governmental Entity with
which it is
contracting, the United States Department of Justice, the
Inspector General of
the United States, or any prime contractor with a Governmental
Entity; nor, to
the knowledge of the Seller, has any such audit or investigation
been
threatened. To the knowledge of the Seller, there is no valid
basis for (i) the
suspension or debarment of the Seller from bidding on contracts
or subcontracts
with any Governmental Entity or (ii) any claim (including any
claim for return
of funds to the Government) pursuant to an audit or
investigation by any of the
entities named in the foregoing sentence. The Seller has no
agreements,
contracts or commitments which require the Seller to obtain or
maintain a
security clearance with any Governmental Entity.
(b) To the knowledge of the Seller, no basis exists for any of
the
following with respect to any of its contracts or subcontracts
with any
Governmental Entity: (i) a Termination for Default (as provided
in 48 C.F.R.
Ch.1 ss.52.249-8, 52.249-9 or similar sections), (ii) a
Termination for
Convenience (as provided in 48 C.F.R. Ch.1 ss.52.241-1, 52.249-2
or similar
sections), or a Stop Work Order (as provided in 48 C.F.R. Ch.1
ss.52.212-13 or
similar sections); and the Seller has no reason to believe that
funding may not
be provided under any contract or subcontract with any
Governmental Entity in
the upcoming federal fiscal year.
2.31 Securities Representations.
(a) The Seller is an "accredited investor" as defined in Rule
501(a)
under the Securities Act. The Seller has not been organized,
reorganized or
recapitalized specifically for the purpose of acquiring the
Shares.
(b) The Seller is acquiring the Shares for its own account
for
investment only, and not with a view to, or for sale in
connection with, any
distribution of the Shares in violation of the Securities Act,
or any rule or
regulation under the Securities Act.
(c) The Seller has had adequate opportunity to obtain from
representatives of the Buyer such information about the Buyer as
is necessary
for the undersigned to evaluate the merits and risks of its
acquisition of the
Shares.
(d) The Seller has sufficient expertise in business and
financial
matters to be able to evaluate the risks involved in the
acquisition of the
Shares and to make an informed investment decision with respect
to such
acquisition.
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<PAGE>
(e) The Seller understands that the Shares have not been
registered
under the Securities Act and are "restricted securities" within
the meaning of
Rule 144 under the Securities Act; and the Shares cannot be
sold, transferred or
otherwise disposed of unless they are subsequently registered
under the
Securities Act or an exemption from registration is then
available.
(f) A legend substantially in the following form will be placed
on
the certificate(s) representing the Shares:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT
UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION TO THE
EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller that the
statements
contained in this Article III are true and correct as of the
date of this
Agreement and will be true and correct as of the Closing as
though made as of
the Closing.
3.1 Organization and Corporate Power. The Buyer is a corporation
duly
organized, validly existing and in good standing under the laws
of the State of
Indiana. The Buyer has all requisite corporate power and
authority to carry on
the business in which it is engaged and to own and use the
properties owned and
used by it.
3.2 Authorization of the Transaction. The Buyer has all
requisite power
and authority to execute and deliver this Agreement, and the
Ancillary
Agreements and to perform its obligations hereunder and
thereunder. The
execution and delivery by the Buyer of this Agreement, and the
Ancillary
Agreements and the performance by the Buyer of this Agreement
and the Ancillary
Agreements and the consummation by the Buyer of the transactions
contemplated
hereby and thereby have been duly and validly authorized by all
necessary action
on the part of the Buyer. This Agreement and the Ancillary
Agreements have been
duly and validly executed and delivered by the Buyer and upon
their execution
and delivery by the Buyer will constitute, valid and binding
obligations of the
Buyer, enforceable against it in accordance with its terms,
except as
enforceability may be limited by bankruptcy, insolvency,
reorganization,
moratorium, arrangement or other similar laws from time to time
in effect.
3.3 Noncontravention. Neither the execution and delivery by the
Buyer of
this Agreement or the Ancillary Agreements, nor the consummation
by the Buyer of
the transactions contemplated hereby or thereby, will (a)
conflict with or
violate any provision of the Articles of Incorporation or
by-laws of the Buyer,
(b) require on the part of the Buyer any notice to or filing
with, or permit,
authorization, consent or approval of, any Governmental Entity,
(c) conflict
with, result in breach of, constitute (with or without due
notice or lapse of
time or both) a default under,
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<PAGE>
result in the acceleration of obligations under, create in any
party any right
to terminate, modify or cancel, or require any notice, consent
or waiver under,
any contract or instrument to which the Buyer is a party or by
which it is bound
or to which any of its assets is subject, or (d) violate any
order, writ,
injunction, decree, statute, rule or regulation applicable to
the Buyer or any
of its properties or assets.
3.4 Capitalization. The authorized capital stock of the Buyer
consists of
20,000,000 shares of Buyer Common Stock, of which 3,937,500
shares were issued
and outstanding, and options, warrants or other rights (the
"Equity Rights") to
acquire 865,000 shares of Buyer Common Stock were outstanding,
in each case, as
of October 15, 2007. As of October 15, 2007, there are no
outstanding options,
warrants or similar rights relating to the Buyer or its equity
other than the
Convertible Promissory Notes of the Buyer dated July 16, 2007
convertible into
an aggregate of up to 833,333 shares of Buyer Common Stock and
the Equity
Rights. The rights and privileges of each class of the Buyer's
capital stock are
set forth in the Buyer's Articles of Incorporation, a copy of
which has been
made available to the Seller. All of the issued and outstanding
shares of Buyer
Common Stock have been duly authorized and validly issued and
are fully paid and
nonassessable. The Shares will be, when issued on the terms and
conditions of
this Agreement, duly authorized, validly issued, fully paid and
nonassessable
and not subject to or issued in violation of any purchase
option, call option,
right of first refusal, preemptive right, subscription right or
any similar
right under any provision of the Buyer's Articles of
Incorporation or Bylaws or
any agreement to which the Buyer is a party or is otherwise
bound.
3.5 No Prior Activities. As of the date of this Agreement, the
Buyer has
not engaged in any business operations.
3.6 Litigation. As of the date of this Agreement, there is no
Legal
Proceeding which is pending or, to the Buyer's knowledge,
threatened against the
Buyer or any subsidiary of the Buyer which, if determined
adversely to the Buyer
or such subsidiary, could have, individually or in the
aggregate, a material
adverse effect on the business, assets, liabilities,
capitalization, prospects,
condition (financial or other), or results of operations of the
Seller.
3.7 Ownership and Management. (a) Schedule 3.7(a) attached
hereto
accurately sets forth the directors and officers of the Buyer as
of the date of
this Agreement.
(b) Schedule 3.7(b) attached hereto accurately sets forth
the
ownership and ownership percentages of the Buyer as of the date
of this
Agreement and a pro forma of the ownership and ownership
percentages of the
Buyer immediately after Closing after giving effect to the other
transactions
that the Buyer Currently contemplates; provided that, except to
the extent set
forth otherwise herein, the Buyer makes no representation or
warranty that all
or any such transactions will be consummated on the terms and
assumptions
underlying such pro forma, or at all..
(c) Except as set forth on Schedule 3.7(c) attached hereto,
Buyer
has not acquired, contracted to acquire or negotiated to acquire
any other
business, either through a purchase of assets or a purchase of
equity ownership.
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ARTICLE IV
PRE-CLOSING COVENANTS
4.1 Closing Efforts. Each of the Parties shall use its
Reasonable Best
Efforts to take all actions and to do all things necessary,
proper or advisable
to consummate the transactions contemplated by this Agreement,
including using
its Reasonable Best Efforts to cause (i) its representations and
warranties to
remain true and correct in all material respects through the
Closing Date and
(ii) the conditions to the obligations of the other Party to
consummate the
transactions contemplated by this Agreement to be satisfied.
4.2 Governmental and Third-Party Notices and Consents.
(a) Each Party shall use its Reasonable Best Efforts to obtain,
at
its expense, all waivers, permits, consents, approvals or other
authorizations
from Governmental Entities, and to effect all registrations,
filings and notices
with or to Governmental Entities, as may be required for such
Party to
consummate the transactions contemplated by this Agreement and
to otherwise
comply with all applicable laws and regulations in connection
with the
consummation of the transactions contemplated by this
Agreement.
(b) The Seller shall use their Reasonable Best Efforts to
obtain, at
the Buyer's expense, all such waivers, consents or approvals
from third parties,
and to give all such notices to third parties, as listed or are
required to be
listed in the Disclosure Schedule. The Buyer shall reasonably
cooperate with the
Seller in the Seller's efforts to obtain such waivers, consents
and approvals.
(c) If (i) any of the Assigned Contracts or other assets or
rights
constituting Acquired Assets may not be assigned and transferred
by the Seller
to the Buyer (as a result of either the provisions thereof or
applicable law)
without the consent or approval of a third party, (ii) the
Seller, after using
their Reasonable Best Efforts, are unable to obtain such consent
or approval
prior to the Closing and (iii) the Closing occurs nevertheless,
then (A) such
Assigned Contracts and/or other assets or rights shall not be
assigned and
transferred by the Seller to the Buyer at the Closing and,
except as provided in
Section 4.2(c) of the Disclosure Schedule, the Buyer shall not
assume the
Seller's future liabilities or future obligations with respect
thereto at the
Closing until such approval or consent is obtained and
assignment occurs, at
which time Buyer will assume all such liabilities and
obligations following the
date of such approval or consent, (B) the Seller shall continue
to use its
Reasonable Best Efforts for a reasonable period of time after
the Closing, and
in any case not less than nine (9) months, to obtain the
necessary consent or
approval as soon as practicable after the Closing, (C) upon the
obtaining of
such consent or approval, the Buyer and the Seller shall execute
such further
instruments of conveyance (in substantially the form executed at
the Closing) as
may be necessary to assign and transfer such Assigned Contracts
and/or other
assets or rights (and the associated liabilities and obligations
of the Seller)
to the Buyer, and (D) from and after the Closing until the
assignment or
termination (at the end of any fixed term thereof or by the
Buyer after nine (9)
months from the date hereof) of each such Assigned Contract
pursuant to clause
(C) above, the Buyer shall perform and fulfill, on a
subcontractor basis, the
obligations of the Seller or the applicable Subsidiary to be
performed under
such Assigned Contract, and the Seller or such Subsidiary
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shall promptly remit to the Buyer all payments received by it
under such
Assigned Contract for services performed during such period, net
of associated
cost of sales and expenses.
4.3 Exclusivity.
(a) Neither the Seller nor the Members shall, directly or
indirectly, (i) initiate, solicit, encourage or otherwise
facilitate any
inquiry, proposal, offer or discussion with any party (other
than the Buyer)
concerning any merger, reorganization, consolidation,
recapitalization, business
combination, liquidation, dissolution, share exchange, sale of
shares, sale of
material assets or similar business transaction involving the
Seller, (ii)
furnish any non-public information concerning the business,
properties or assets
of the Seller to any party (other than the Buyer), (iii) engage
in discussions
or negotiations with any party (other than the Buyer) concerning
any such
transaction, (iv) vote any shares of the Seller in favor of any
such transaction
with any party (other than the Buyer), or (v) enter into any
agreement with any
party (other than the Buyer) concerning any such
transaction.
(b) The Seller and each Member shall immediately notify any
party
with which discussions or negotiations of the nature described
in paragraph (a)
above were pending that the Seller or the Member, as applicable,
is terminating
such discussions or negotiations. If the Seller or a Member
receives any
inquiry, proposal or offer of the nature described in paragraph
(a) above, the
Seller or Member, as applicable, shall, within one business day
after such
receipt, notify the Buyer of such inquiry, proposal or offer,
including the
identity of the other party and the terms of such inquiry,
proposal or offer.
4.4 Operation of Business. Except as contemplated by this
Agreement,
during the period from the date of this Agreement to the
Closing, the Seller
shall conduct its operations in the Ordinary Course of Business
and in material
compliance with all applicable laws and regulations and, to the
extent
consistent therewith, use its Reasonable Best Efforts to
preserve intact its
current business organization, keep its physical assets in good
working
condition, keep available the services of its current officers
and employees and
preserve its relationships with customers, suppliers and others
having business
dealings with it to the end that its goodwill and ongoing
business shall not be
impaired in any material respect. Without limiting the
generality of the
foregoing, prior to the Closing, the Seller shall not, without
the written
consent of the Buyer:
(a) issue or sell any shares or other securities of the Seller
or
any o
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