Exhibit 10.1
ASSET PURCHASE
AGREEMENT
THIS ASSET
PURCHASE AGREEMENT (the
“Agreement”), made and entered into as of this 1st day
of June, 2009, by and between ERF Wireless, Inc., a Nevada
corporation (“Parent”), and ERF Wireless Bundled
Services, Inc., a Texas corporation and wholly-owned subsidiary of
Parent, (“Subsidiary”) (Parent and Subsidiary
hereinafter collectively referred to and jointly and severally
liable as “Buyer”), and Ronnie D. Franklin ,
the sole proprietor of iTexas.net headquartered in Granbury, Texas
(“Seller”).
W I T N E S S E T
H:
WHEREAS , Seller presently operates a business engaged
in providing a comprehensive full range of internet services
including internet access, dial-in, and wireless
solutions to commercial businesses and residential customers (the
“Business”); and
WHEREAS , Seller desires to sell substantially all of
the assets and contracts of the Business to Buyer, and Buyer
desires to purchase such assets and contracts from Seller, on the
terms and subject to the conditions set forth herein.
NOW,
THEREFORE , Buyer and
Seller, in consideration of the mutual promises hereinafter set
forth, do hereby promise, and agree as follows:
ARTICLE
ONE: ASSETS TO BE PURCHASED
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Purchased
Assets. Upon the terms and subject to the
conditions set forth in this Agreement, Seller hereby agrees to
sell to Subsidiary and Subsidiary hereby agrees to purchase from
Seller, at the Closing, all of Seller's right, title, and interest
in substantially all of the assets associated with the Business,
including the following (collectively, the “Purchased
Assets”):
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The assets
being acquired include the rights, title, and interest in
substantially all of the assets associated with the Business,
including:
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All wireless
and dial-up network infrastructure equipment, including subscriber
units, access nodes, backhaul links, radios, antennas, switches,
routers and servers with related software;
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the 96 foot
Trylon tower located at 3211 Fall Creek Highway, Acton,
Texas;
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all inventory,
equipment, goods, documents pertaining to the operations and
instruments of the Business;
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all rights to
equipment, tower and facilities space leases for the Business
(“Assumed Leases”);
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assignment of
Seller’s 3.65 WiMAX license rights on the main tower located
at Hwy 51 South at 3439 Peak Road, Granbury, TX.
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all
transferable customer and contractual rights held by the Business,
including all ISP Subscriber Agreements, all Design Agreements,
Equipment Purchase Agreements, Internet Access and Monitoring and
Maintenance Agreements with customers with fixed wireless
broadband;
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all general
intangibles (including trademarks, trade names and symbols) used in
connection with iTexas.net;
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all work in
progress, and all other contracts and agreements relating to the
Business;
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all
transferable equipment and software related to the Business,
(except as specifically agreed and set forth otherwise as
“excluded equipment” in the Definitive
Agreement;
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all legally
assignable government permits, licenses and certifications for the
Business ("Governmental Permits"); and
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all documents,
files and records containing technical support, all additions,
accessions and substitutions thereto and other information
pertaining to the Business in Seller’s possession or
control.
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Seller will be
permitted to retain title to certain equipment set forth on the
Asset Listing.pdf document that is specifically designated
as “Retained by Ronnie”. Notwithstanding,
Buyer shall be permitted to retain and have unfettered use this
equipment for a minimum of 90 days until appropriate transition of
customers can be accomplished and will be allowed a one-time 30
extension to accomplish this transition. Specifically,
this designation will only apply to the following
equipment:
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Compaq Server -
Modus Mail Server
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Compaq Drive -
Array Drive chassis and drives
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Modus Mail
- Modus Mail Server License - Unlimited Users
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Compaq Server -
Emerald Server
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Compaq Drive
- Array Drive chassis and drives
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Emerald ISP
Customer System - Emerald License for 3000 MBRs
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Seller will
provide to Buyer copies of the following books, records, manuals
and other materials in any tangible form to the extent such books,
records, manuals and other materials relate to the Business and/or
the Purchased Assets: (i) records relating to customers that are
parties to any contracts, (ii) records relating to vendors, and
(iii) all other books, records, files, correspondence, documents
and information owned by Seller relating to the Business that are
currently in the possession of the Seller, however maintained or
stored (collectively, the “Records”), it being
understood that the Seller may delete confidential information that
does not relate to the Purchased Assets or the Business.
1.2 Excluded
Assets. The
Purchased Assets shall not include the following (herein referred
to as the “Excluded Assets”):
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all corporate
minute books, stock transfer books and other documents relating to
the organization, maintenance and existence of Seller as a limited
liability company;
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all rights of
Seller pursuant to this Agreement, including the consideration paid
to Seller pursuant to this Agreement;
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all originals
of personnel records, if any, and other records that Seller is
required by applicable law to retain in its possession;
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all tax refunds
which are due to Seller;
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all membership
interests in Seller; and
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f.
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any other item
specifically listed in Schedule 1.2 .
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1.3 Purchase Price; Payment of Purchase
Price . In addition to the Assumed Liabilities
described below, the aggregate consideration for the Purchased
Assets (the “Purchase Price”) shall be the
amount equal to $165,000.
1.4
Payment Terms . The Purchase Price shall be payable
by Buyer to Seller on the Closing Date as follows:
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$ 16,500
cash as set forth in definitive agreement
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$66,000 payable by a Secured Convertible Promissory Note
in the form attached hereto as Exhibit 1.4(b) (the
“Promissory Note or Note”).
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$82,500 to
be paid by issuance of Rule 144 Restricted Stock
priced at trailing 10 day average
prior to closing. Buyer agrees to make up any shortfall in Freely
Tradable common stock if the aggregate value of all shares issued
are sold in open market transactions and total less than $82,500
unless the shortfall expires according the following
provisions. The shortfall guarantee shall expire on the
earlier of (a) the liquidation of $82,500 in value or (c) 18 months
following the closing.
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Seller and
Seller’s secured lender, First National Bank of Granbury
(“Bank”), agree to release respective UCC-1 liens
within 10 business days of the full repayment of the $66,000
Secured Note and receipt of $82,500 in cash from the sale of the
Restricted Stock. In the event that the Seller’s
monthly note obligations to the Bank are not satisfied in
accordance with the applicable terms set forth in Seller’s
note with the Bank and the Bank forecloses on the assets of the
Business, Buyer reserves the right to settle such foreclosure
action with the Bank and discontinue all future obligations against
this agreement. In the event that the Buyer is required
to settle such foreclosure actions, the Seller and Seller’s
Bank agree to release all UCC-1 liens within 10 business days of
such settlement action.
For purposes of
this Agreement, “Rule 144 Restricted Stock” shall mean
shares of the common stock, par value $.001, of Parent (the
“Common Stock”) the issuance of which to Seller has not
been registered under the Securities Act of 1933, as amended (the
“Securities Act”) and that are considered
“restricted securities” as defined in Section 144 of
the Securities Act.
For purposes of
this Agreement, “Freely Tradable Common Stock” shall
refer to Common Stock of Parent the issuance of which to Seller has
been registered under the Securities Act, and that has not subject
to any contractual, regulatory or other legal restrictions on
transfer, is free and clear of all liens and encumbrances, and is
freely tradable to members of the general public.
1.5
Assumed Liabilities; No Other Assumption of
Liabilities . As partial consideration for the
Purchased Assets, Buyer shall assume and agree to pay, perform and
discharge only those liabilities and obligations of Seller (the
“Assumed Liabilities”):
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arising in
connection with the operation of the Business by the Purchaser
after the closing date; and
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arising after
the closing date in connection with the performance by the
Purchaser of the contracts and agreements associated with the
Business assigned to Purchaser, including; ISP Subscriber
Agreements, tower leases, telecomm and wholesale dial-up provider
costs in effect pertaining to the Business.
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The Assumed
Liabilities shall expressly exclude (i) any accrued payroll and
payroll taxes, if any, (ii) any unpaid obligations of Seller to
Frontier Internet, LLC for services rendered or product purchases
prior to closing, (iii) all vendor obligations arising prior to
closing, (iv) any accounts payable obligations for goods and
services delivered or rendered prior to the Closing Date, (v) any
liabilities or obligations related to the Assigned Leases or
Assigned Contracts that arise from breach of contract, default or
other such tortious claim occurring prior to Closing,
(collectively, the “Specified Retained
Liabilities”). The Specified Retained Liabilities
shall either be retained by Seller after Closing or fully paid by
Seller prior to Closing.
Except for the
Assumed Liabilities, Buyer shall not assume or be obligated under,
or become liable for, any debt, liability, contract or obligation
whatsoever of Seller or the Business, and Seller shall be
responsible for the payment or performance and full discharge of
all debts, liabilities, contracts and obligations whatsoever of
Seller, including those related to the Business, that arise prior
to the Closing and the Specified Retained
Liabilities. In particular (and by way only of example
and not by way of limitation), Seller shall be and remain solely
responsible for, and shall timely pay or perform and discharge, all
debts, liabilities, contracts and obligations with respect to the
Business other than the Assumed Liabilities, including (i) the
Specified Retained Liabilities, (ii) any tax liability or
obligation arising in connection with transactions occurring prior
to the Closing, but excluding any sales, use, transfer or other tax
obligation arising out of or in connection with the transactions
contemplated by this Agreement or the performance, use or operation
of the Purchased Assets by Buyer, which Buyer hereby agrees to be
responsible for; (and (iv) any legal claim or any other liability
or obligation whatsoever incurred by Seller relating to the
Business for periods or occurrences prior to and including the
Closing Date.
1.6 Allocation of Purchase
Price . The Purchase Price shall be allocated
for federal income tax purposes in accordance with
Schedule 1.6, (to be completed as a post-Closing
schedule) . The parties shall make consistent use of
the allocation specified on Schedule 1.6 for all
federal income tax purposes and in all filings, declarations and
reports with the Internal Revenue Service (the “IRS”)
in respect thereof, including the reports required to be filed
under Section 1060 of the Internal Revenue Code, as amended
(the “Code”). Each of the parties will file
all tax returns and information reports, including the IRS Form
8594 and any disclosures that are required under Section 1060 of
the Code, in a manner consistent with the allocation specified in
Schedule 1.6 . In any Proceeding (hereinafter
defined) related to the determination of any tax, neither Buyer nor
Seller shall contend or represent that such allocation is not a
correct allocation.
2.1 Time and Place of Closing;
Closing Deliveries. The closing of the purchase and sale
contemplated herein (the “Closing”) shall take place at
3:00 p.m., on June 01, 2009 at the offices of Parent, located in
League City, Texas. The date of Closing is hereinafter referred to
as the “Closing Date.”
At the Closing,
Buyer shall deliver to Seller according to Seller’s
instructions:
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the Cash Amount
by wire transfer or certified bank check;
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certificates
representing a number of shares of Rule 144 Restricted Stock of the
Parent, as determined in accordance with Section 1.4 (the
“Stock Certificates”), or evidence satisfactory to
Seller that Buyer has instructed its transfer agent to prepare and
deliver such Stock Certificates and that such Stock Certificates
will be delivered to Seller no later than five (5) days following
Closing;
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the executed
Promissory Note; ;
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the executed
Security Agreement, the form of which is attached hereto as
Exhibit 2.1(d) (the “Security Agreement”);
and
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the documents,
certificates, agreements and instruments described below in
Section 2.3 .
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2.2 Conditions Precedent to
Buyer's Obligation. The obligation of Buyer to consummate the
transactions contemplated herein is subject to the satisfaction
(or, in Buyer's sole discretion, written waiver thereof) of the
following conditions as of the Closing:
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The
representations and warranties of Seller made in this Agreement
shall be true and correct in all material respects at
Closing;
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No demand,
action, suit, audit, investigation, review, claim or other legal or
administrative proceeding (collectively, a
“Proceeding”) by any nation or government, any state or
other political subdivision thereof, including any governmental
agency, department, commission, or instrumentality of the United
States, any State of the United States or any political subdivision
thereof or, any self-regulatory agency or authority (collectively,
“Governmental Authority”) or other person shall have
been instituted or threatened against Seller which seeks to enjoin,
restrain or prohibit, or which questions the validity or legality
of, the transactions contemplated hereby or which otherwise seeks
to affect or could reasonably be expected to affect the
transactions contemplated hereby;
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Seller shall
have approved this Agreement and the transactions contemplated
hereby;
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Seller shall
have performed in all material respects its obligations described
in Section 5.1;
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Seller shall
enter into a sales lead referral agreement with the Buyer upon
terms to be mutually agreed for introductions to prospective new
wireless ISP customers on a post-closing basis.
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Buyer shall
have received from Seller all of the following:
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(i) A duly
executed bill of sale, the form of which is attached hereto as
Exhibit 2.2(e)(i) (the “Bill of Sale”),
which includes a complete list of the Assigned Tangible Assets,
conveying to Buyer the Assigned Tangible Assets free and clear of
all pledges, security interests, or other similar liens granted by
Seller and free and clear of all other adverse claims of any kind
whatsoever known by Seller (collectively,
“Encumbrances”), except (A) Encumbrances for taxes, the
payment of which are not delinquent, (B) materialmen's,
warehousemen's, mechanic's, lender’s, lessor’s, or
other Encumbrances arising by operation of law in the ordinary
course of business for sums not due and which do not materially
detract from the value of such assets or properties or materially
impair the operation of the Business, and (C) statutory
Encumbrances incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or
other forms of governmental insurance or benefits (collectively
“Permitted Encumbrances”);
(ii) A duly
executed assignment and assumption agreement, the form of which is
attached hereto as Exhibit 2.2(f)(ii) (the “Assignment
and Assumption Agreement”), which includes a complete list of
all Assigned Leases, Assigned Contracts and Governmental
Permits;
(iii) Duly
executed trademark, copyright and other intellectual property
assignment documents, as reasonably requested by Buyer to fully
effectuate the use by or transfer to Buyer of the intellectual
property;
(iv) Actual or
constructive physical possession of the Purchased Assets and the
Records;
(v) An executed
certificate of amendment to Seller’s Certificate of Formation
effecting a change in Seller’s name (the
“Amendment”); and
(vi) A
certificate of the managers of Seller certifying, as complete and
accurate as of the Closing (A) copies of the governing documents of
Seller, (B) all requisite resolutions or actions of Seller's
managers and members approving the execution and delivery of this
Agreement and the consummation of the contemplated transactions,
and (C) the incumbency and signatures of the managers of Seller
executing this Agreement and any other document relating to the
contemplated transactions.
2.3 Conditions Precedent to
Seller's Obligations. The obligation of Seller to consummate the
transactions contemplated herein is subject to the satisfaction
(or, in Seller’s sole discretion, written waiver thereof) of
the following conditions as of the Closing:
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The
representations and warranties of Buyer made in this Agreement
shall be true and correct in all material respects at
Closing;
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No Proceeding
by any Governmental Authority or other person shall have been
instituted or threatened against Buyer which seeks to enjoin,
restrain or prohibit, or which questions the validity or legality
of, the transactions contemplated hereby or which otherwise seeks
to affect or could reasonably be expected to affect the
transactions contemplated hereby;
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Buyer’s
operations have been in compliance with all applicable Laws and
regulations that could have a material adverse impact on the
Business;
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Buyer shall
have performed in all material respects its obligations described
in Section 5.1 and elsewhere in this Agreement;
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Seller shall
have received from Buyer all of the following:
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(i) The
Purchase Price (including the duly executed Promissory Note,
Security Agreement, and the stock certificates representing the
shares of Rule 144 Restricted Stock as described in Section
1.4(d) );
(ii) The
Assignment and Assumption Agreement, duly executed by Subsidiary;
and
(iii) A
certificate of the Secretary of each of Parent and Subsidiary
certifying, as complete and accurate as of the Closing (A) attached
copies of the governing documents of each of Parent and Subsidiary,
as amended and restated, as applicable, (B) all requisite
resolutions or actions of each of Parent’s and
Subsidiary’s board of directors approving the execution and
delivery of this Agreement and the consummation of the contemplated
transactions, and (C) the incumbency and signatures of the officers
of each of Parent and Subsidiary executing this Agreement and any
other document relating to the contemplated
transactions.
2.4
Consents and Other Conditions to
Closing. It shall also be a condition precedent to
closing that:
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Buyer and
Seller shall have obtained all necessary written consents or
approvals from all governmental or regulatory authorities that are
necessary to acquire the Purchased Assets and for Subsidiary to
continue the historical operations of the Seller;
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Seller shall
not be involved in or threatened with any litigation that would
have a material adverse effect on the Purchased Assets;
and
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Seller shall
have obtained all necessary consents from any utility companies,
governmental or regulatory authorities, landlords, lenders,
suppliers and other third parties in connection with the material
contracts described in Schedule 2.4 (the “Material
Contracts”) to be assumed by Subsidiary at Closing (the
“Material Consents”). If Seller is unable to
obtain any Material Consents as of the Closing Date (each such
Material Contract for which a Material Consent was not obtained as
of the Closing Date shall be referred to as a “Restricted
Material Contract”), Buyer may waive the closing conditions
as to any such Material Consent and either:
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(i) elect to
have Seller continue its efforts to obtain the Material Consents;
or
(ii) elect to
have Seller retain such Restricted Material Contract and all
liabilities arising therefrom or relating thereto.
If Buyer elects
to have Seller continue its efforts to obtain any Material Consents
and the Closing occurs, notwithstanding Sections 1.1 and 1.5
to the contrary, neither this Agreement nor the Assignment and
Assumption Agreement nor any other document related to the
consummation of the transactions contemplated in this Agreement
shall constitute a sale, assignment, assumption, transfer,
conveyance, delivery, or an attempted sale, assignment, assumption,
transfer, conveyance or delivery of the Restricted Material
Contracts. Following the Closing, the parties shall use their Best
Efforts (hereinafter defined) (other than that Seller and Buyer
shall have no obligation to offer or pay any consideration in order
to obtain any such Material Consents) and cooperate with each other
to obtain the Material Consents relating to the Restricted Material
Contracts as quickly as practicable. Pending the
obtainment of such Material Consents relating to the Restricted
Material Contracts, the parties shall cooperate with each other in
any reasonable and lawful arrangements designed to provide to Buyer
the benefits of use of each Restricted Material Contract for the
term of such agreement (or any right or benefit arising thereunder,
including the enforcement for the benefit of Buyer of any and all
rights of Seller against a third party thereunder). Once
a Material Consent for the sale, assignment, assumption, transfer,
conveyance and delivery of a Restricted Material Contract is
obtained, Seller shall promptly assign, transfer, convey and
deliver such Restricted Material Contract to Buyer, and Buyer shall
assume the obligations under such Restricted Material Contract
assigned to Buyer from and after the date of assignment to Buyer
pursuant to a special-purpose assignment and assumption agreement
substantially similar in terms to those of the Assignment and
Assumption Agreement (which special-purpose agreement the parties
shall prepare, execute and deliver in good faith at the time of
such transfer, all at no additional cost to Buyer).
If there are
any consents not listed on Schedule 2.4 that are
necessary for the assignment and transfer of any Seller contracts
to Buyer (the “Nonmaterial Consents”) which have not
yet been obtained (or otherwise are not in full force and effect)
as of the Closing Date, Buyer shall elect at the Closing, in the
case of each Seller contract for which a Nonmaterial Consents was
not obtained (or otherwise are not in full force and effect) as of
the Closing Date (the “Restricted
Nonmaterial Contracts”), whether to:
(i) accept the
assignment of such Restricted Nonmaterial Contract, in such case,
as between Buyer and Seller, such Restricted Nonmaterial Contract
shall, to the maximum extent practicable and notwithstanding the
failure to obtain the applicable Nonmaterial Consent, be
transferred at the Closing pursuant to the Assignment and
Assumption Agreement or as elsewhere provided under this Agreement;
or
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(ii) reject the
assignment of such Restricted Nonmaterial Contracts, in which case,
notwithstanding Sections 1.1 and 1.5 , (A) neither this
Agreement nor the Assignment and Assumption Agreement nor any other
document related to the consummation of the transactions
contemplated by this Agreement shall constitute a sale, assignment,
assumption, conveyance or delivery or an attempted sale,
assignment, assumption, transfer, conveyance or delivery of such
Restricted Nonmaterial Contract, and (B) Seller shall retain such
Restricted Nonmaterial Contract and all liabilities arising
therefrom or relating thereto.
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“Best Efforts” means the efforts
that a prudent person desirous of achieving a result would use in
similar circumstances to achieve that result as expeditiously as
possible, provided, however, that a person required to use Best
Efforts under this Agreement will not be required to take actions
that would result in a material adverse change in the benefits to
such person of this Agreement and the contemplated transactions, or
to dispose of or make any change to its business, expend any
material funds or incur any other material burden.
2.5 Failure of Conditions
. If any of the material
conditions to Closing set forth in Sections 2.2, 2.3 and 2.4
have not been satisfied, the party or parties entitled to the
benefit of such material conditions may elect to (i) waive such
conditions, (ii) terminate this Agreement without
further
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