Exhibit 10.1

 

ASSET PURCHASE AGREEMENT

 

This Agreement(the “Agreement”)is made and entered into on the 17th day of
November 2020 (“Effective Date”)by and between ActiveServe, Inc., a Florida
corporation (hereinafter “Seller”), and T3 Communications, Inc., a Florida
corporation and wholly owned subsidiary of T3 Communications, Inc., a Nevada
corporation, or its assigns(hereinafter “Buyer”).

 

WHEREAS Seller’s business is located at 6200 NW 7th St., # 261207, Miami,
Florida 33126; and

 

WHEREAS, Seller is the owner of that customer base, certain equipment,
inventory, contract rights, software and other licenses and miscellaneous assets
used in connection with the operation of Seller’s telecommunications business
known as ActivePBX® (hereinafter “Business”); and

 

WHEREAS, Seller also engages in the business of providing certain hosting and
managed services; and

 

WHEREAS, Buyer desires to acquire substantially all of the assets used or useful
in the operation of the Business and Seller desires to sell such assets to
Buyer.

 

NOW, THEREFORE, in consideration of mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:

 

SECTION 1. ASSETS PURCHASED; ASSETS EXCLUDED; LIABILITIES ASSUMED

 

1.1Assets Purchased. Subject to the terms and conditions set forth herein,
Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer
shall purchase from Seller, all right, title and interest in, to and under the
business, properties, assets, goodwill and rights of Seller of whatever kind and
nature, tangible or intangible, that are owned, used or licensed by Seller and
used in the operation of the Business as of the Closing Date, except for the
Excluded Assets (collectively, “Purchased Assets”), free and clear of all
Encumbrances, other than Permitted Encumbrances. The Purchased Assets consist of
the following:

 

1)All of Seller’s Customer Base for the Interconnected Voice over Internet
Protocol or I-VoIP operated under the commercial brand name “ActivePBX®”
(“Customer Base”) including all contracts and service orders with customers.

 

2)All of Seller’s accounts receivable (as set forth in Schedule 1.1.2),
including associated commissions or revenue to be received under Agent and/or
Partner Agreements.

 

3)The Seller’s furniture, fixtures, and equipment; computer hardware, software,
and peripherals; and materials and supplies necessary to operate the Customer
Base as listed in Exhibit A.

 

4)All of Seller’s inventory on hand or on order from suppliers including YeaLink
and Polycom used to operate the Customer Base.

 

5)All of Seller’s good will, its trade name rights in the name “ActivePBX”, its
trademark rights in the mark “ActivePBX®”, including the federal registration of
this mark, its URL, www.activepbx.com, and websites as well as domain names
associated with the I-VoIP business of the Customer Base , including content and
software, and all other URLs and trademarks registered by Seller as listed in
Exhibit A.

 

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6)Seller’s business telephone for the I-VoIP business of ActivePBX, along with
associated facsimile and the domain name based e-mail addresses associated with
the business of the Customer Base under the brand ActivePBX and as found in
Exhibit A.

 

7)All of Seller’s records used in the operation of the I-VoIP business of
ActivePBX, including electronic records, pertaining to the operation of the
Business, including customer records, supplier records, and employee records.

 

8)All Agent and/or Partner agreements used in the operation of the I-VoIP
business of ActivePBX (as set forth in Section 1.1.8 of the Disclosure
Schedules).

 

9)All key supplier agreements, excluding those suppliers used by Seller in the
operation of its Managed Platform Service(s) under the brand and trade name
ActiveServe (as set forth in Section 1.1.9 of the Disclosure Schedules).

 

10)All licenses with NetSapiens(as set forth in Section 1.1.10 of the Disclosure
Schedules).

 

11)All licenses with Sansay (as set forth in Section 1.1.11 of the Disclosure
Schedules).

 

12)All certifications and licenses with Polycom and/or Yealink (as set forth in
Section 1.1.12 of the Disclosure Schedules).

 

13)All software licenses associated with the Business (as set forth in Section
1.1.13 of the Disclosure Schedules).

 

14)Brand and elements of Seller’s Interconnected Voice-over-IP (“I-VoIP”).

 

15)All other assets of Seller other than Excluded Assets, (as set forth in
Section 1.1.15 of the Disclosure Schedules).

 

1.2 Excluded Assets. The Purchased Assets shall not include any assets, elements
and business of Seller’s hosting services under the name “ActiveServe” and
Managed Platform Service business including, but not limited to, data center
equipment and servers used for virtual services and data storage, web hosting,
dedicated server hosting, co-location, e-mail hosting, database hosting, domain
name services, IP transport addresses associated with Seller’s name and similar
internet web-based platform managed services(collectively, “Excluded
Assets”).The Purchased Assets shall also not include any real property; leases
of real property; any rights, claims or causes of action of Seller and its
Affiliates against third parties to the extent arising in connection with the
Excluded Assets and cash. The parties acknowledge and agree that Seller will be
using certain Excluded Assets in connection with its post-Closing provision of
hosting and managed services as a continuing ongoing concern of the Seller.

 

1.3 No Assumption of Liabilities. Except for assuming responsibility for (1) all
unfilled service orders of telecommunications and I-VoIP services to customers
of Seller, (2) payment of purchase orders for inventory items that have been
placed by Seller prior to the Closing Date but that will not be delivered until
after the Closing Date, and (3) Seller’s obligations under contracts
constituting Purchased Assets , Buyer shall not be responsible or liable for any
other debts, liabilities or obligations of Seller. 1.4Taxes. Seller shall be
responsible for all sales tax, surcharges, USF, payroll, be it federal, state or
municipal and any other taxes incurred prior to the Effective Date of this
Agreement.

 

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SECTION 2. PURCHASE PRICE 

 

The aggregate purchase price for the Purchased Assets shall be $2,555,000 USD in
cash, subject to adjustment as provided herein (“Purchase Price”), payable as
follows:

 

2.1 Purchase Price. (i) At Closing, Buyer shall pay to Seller the sum of
$1,190,000 USD, $50,000 USD of which shall be retained by Buyer in a segregated
bank account, in accordance with Section 2.2 below and $40,000 of which shall be
credited by Seller as paid by Buyer pursuant to the Second Amendment to Letter
of Intent between Seller and T3 Communications, Inc., a Nevada corporation dated
as of October 15,2020.

 

(ii) $1,090,000 of the Purchase Price shall be paid in 8 equal quarterly
payments (the “Quarterly Payments”) of $136,250 USD, subject to Buyer achieving
quarterly post-purchase Business MRC revenues from the Customer Base (the
“Quarterly Revenues”), commencing with the quarter ending January 31, 2021 of
not less than: $353,085.99 (Quarter ending (“QE”) January 31,2021); $349,555.13
(QE April 30,2021); $346,059.58 (QE July 31, 2021); $342,598.99 (QE October 31,
2021); $339,173.00 (QE January 31,2022 ); $335,781.27 (QE April 30, 2022);
$332,423.46 (QE July 31, 2022); and $329,099.22 (QE October 31, 2022) for each
respective quarter, derived solely and directly from the MRC revenue from the
Customer Base. Post-purchase revenues and Quarterly Revenue shall include, and
be tracked by the Buyer, to include post-purchase Customer Base service
upgrade(s) or expanded Business within the service lines of attributable to
Seller and from the same Customer Base sold, as well as any new MRC revenues
derived from existing partnership agreements established by the Seller to
sustain, expand and/or upgrade the Customer Base prior to Closing. The total of
these MRC amounts take into account a customer revenue attrition of 1% per
quarter, which attrition levels Buyer and Seller agree reflect economic
conditions for the Business and the telecommunications industry at this time. To
the extent that a Quarterly Revenue threshold is not reached, the amount of the
corresponding Quarterly Payment shall be reduced on a proportional basis. (For
example, if in a given quarter to which the foregoing calculation applies, the
Quarterly Revenue amount is 90% of the required amount, only 90% of the
Quarterly Payment amount for that quarter is required to be paid to Seller and
Buyer shall have no further obligation to Seller with respect to the 10% portion
of such Quarterly Payment which is not then due and payable for that quarter.)
Each Quarterly Payment shall be made to Seller not more than 45 days after the
end of the quarter to which it relates affording Buyer 30 days to evaluate
revenues and status of collections and aging balances as well prepare supporting
financial reports on the Quarterly Revenue, and provide results to Seller, and a
fifteen day grace period thereafter for Buyer to pay Seller. The obligation of
Buyer to Seller under this Section 2.1(ii) shall be reflected in a promissory
note of Buyer of even date herewith in the form of Exhibit I hereto (the
“Note”).The obligation reflected by the Note shall be subordinated to Buyer’s
obligations to its senior lender, Post Road Administrative LLC (“Post Road”), as
set forth in the Subordination Agreement of even date herewith in the form of
Exhibit J hereto among Buyer Seller and Post Road(the “Subordination
Agreement”).

 

(iii) $275,000 USD of the Purchase Price (the “Customer Renewal Value”) shall
take the form of an incentive earn-out to be paid with respect to Seller’s 
customer  accounts which are  transferred to Buyer at closing (the “Renewable
Contracts”) , that are renewed, expanded and/or revised with Buyer for a minimum
term of twelve  months with an auto-renewal for 12 months . Each such Renewable
Contract is set forth in Exhibit B hereto. As set forth therein, the Renewable
Contracts have an aggregate MRC of $120,725.78. If, on the twelve-month
anniversary of the Closing Date (the “Anniversary Date”), the aggregate MRC of
the Renewable Contracts that have remained in effect through the Anniversary
Date is $90,544.34 or greater (ie. seventy-five percent (75%) or more of the
current MRC of $120,725.78), the full Customer Renewal Value of $275,000 shall
be payable to Seller. If the aggregate MRC of the Renewable Contracts that have
remained in effect through the Anniversary Date is less than $90,544.34 , a
proportionate amount of the $275,000 Customer Renewable Value shall be payable
to Seller based on the percentage obtained when dividing the aggregate MRC of
the Renewable Contracts on the Anniversary Date by $90,544.34 and multiplying
 such percentage by $275,000. (By way of example: If the aggregate MRC of the
Renewable Contracts that have remained in effect through the Anniversary Date
is $60,000, the Seller shall be entitled to receive 66.27% of the Customer
Renewal Value (ie. $182,231.14, which is the amount obtained when  dividing
$60,000 by $90,544.34 and multiplying that amount by $275,000).Upon Buyer’s
payment of the applicable amount of the Customer Renewal Value to Seller,  Buyer
shall have no further obligation to Seller with respect to the portion of the
Customer Renewal Value ($92,768.86 in the present  example) which has not been
earned by  Seller. The incentive earn-out payment  which will become due to
 Seller hereunder shall be made no later than  45 days after the  Anniversary
Date,  affording Buyer 30 days to determine  the applicable MRC amount of the
 Renewable Contracts which have satisfied the above renewal  requirements and
provide results of same to Seller, and a fifteen-day grace period thereafter for
Buyer to pay Seller.

 

2.2 Indemnification Holdback. At Closing, an amount of $50,000.00 USD (the
“Holdback Amount”), shall be withheld by the Buyer from the Purchase Price to be
paid pursuant to Section 2.1(i) above for indemnification of Buyer related to
representations and warranties of Seller made in Section 4 hereof. The Holdback
Amount shall be deposited into a separate depository bank account of Buyer which
is non-interest bearing (the “Escrow Account”) for a period of twelve (12)
consecutive months from the date of Closing (the “Holdback Release Date”). On
the Holdback Release Date, the Buyer shall have five (5) business days to: (1)
exercise the right to offset any losses or damages related to breaches of
representations and warranties of Seller that have accrued prior to the Holdback
Release Date and pay the balance thereafter to the Seller; or (2) pay the
entirety of the Holdback Amount to the Seller. The right of Buyer to offset any
losses or damages related to representations and warranties of Seller is subject
to receipt of a thirty (30) calendar day written notice by the Seller of Buyer’s
articulating and detailing its set-off claims against the Holdback Amount (the
“Holdback Notice”). Within ten (10) calendar days from the receipt of the
Holdback Notice, Seller has the right to dispute in writing any claimed set-offs
related to representations and warranties, or, concede to the proposed set-off
of the Holdback Amount to satisfy the claimed loss or damage related to Section
4 of this Agreement. In the event that Seller receives the Holdback Notice and
does not dispute the set-off against the Holdback Amount before the Holdback
Release Date, the Buyer may apply the set-off for claimed losses and damages
under Section 4 of this Agreement and pay the resulting balance of the Holdback
Amount, if any, to the Seller. In the event Seller disputes the set-off against
the Holdback Amount in an amount more than $12,500.00 USD, the Holdback Amount
shall continue to be maintained by the Buyer in the Escrow Account and Buyer and
Seller agree that the matter shall be submitted to mandatory and expedited
mediation by a Florida Court Certified Mediator within thirty (30) days, unless
otherwise agreed, or resolved, by the parties in good faith on their own through
their business offices. Costs of the Mediator shall be equally split including
any prepayments and administrative fees. Should mandatory mediation result in
impasse, Buyer shall have the right to immediately set-off its losses and
damages up to fifty percent (50%) of the Holdback Amount and shall maintain the
remaining balance in the Escrow Account. Thereafter, the dispute may be
litigated in accordance with Section 10 of this Agreement. This Section does not
limit any rights of Buyer under Section 8 of this Agreement.

 

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2.3 Interest. The parties agree that amounts due hereunder shall be net amounts
due to Seller without regard to any interest whatsoever, whether actual, imputed
or implied.   

    

2.4 Expenses. Expenses, including but not limited to utilities, personal
property taxes, rents, real property taxes, wages, vacation pay, payroll taxes,
fringe benefits of employees of Seller and any other expenses up to midnight
on the day immediately preceding the Effective Date shall be for the account of
Seller and thereafter for the account of the Buyer, to be made and paid, insofar
as reasonably possible, on the closing date, with settlement of any remaining
items to be made on or before their due date.

 

2.5 Consulting Agreements At Closing, Alex Gonzalez, the CEO of Seller and Jose
Gonzalez, the CTO of Seller (each a “Consultant”) shall enter into one-year
Consulting Agreements with Buyer, in the form of Exhibit C hereto (“Consulting
Agreements”).Each Consulting Agreement will provide for annual compensation of
$90,000,prorated over the Term and payable the first day of every calendar month
after each month that services have been provided under the Consulting
Agreements. The Consulting Agreements will be subject to automatic monthly
renewals after the initial term, unless otherwise terminated by their terms and
conditions. The parties to the Consulting Agreements may, upon mutual agreement,
convert the Consulting Agreements into employment agreements on terms to be
negotiated. The Consulting Agreements will contain customary non-compete
provisions which will prohibit the Consultants from competing with Buyer with
respect to the Business for a period of three (3) years commencing on the
Closing Date. This Consulting Agreement is separate and apart from the Managed
Service Agreement to be entered into between Buyer and Seller for post-purchase
operation of the Purchased Assets and the Business.

 

2.6 Buyer Assignment. Notwithstanding anything herein to the contrary, and for
all purposes of this Agreement and the transactions contemplated hereby, Seller
and Buyer agree that Buyer shall be entitled to assign its rights to purchase
the Purchased Assets to an Affiliate of Buyer and to Post Road Special
Opportunity Fund II LP (“PR”), including Affiliates and agents of PR..

 

SECTION 3. CLOSING

 

3.1 Closing. The closing of the sale of the Purchased Assets by Seller to Buyer
contemplated by this Agreement (the “Closing”)is subject to the prior consent
and authorization of the Federal Communications Commission (“FCC”) and shall
occur on a date (the “Closing Date”) that is no more than two (2) business days
following the date of the FCC’s Consent and Grant of Assignment of Assets to the
Buyer, and when all the Deliverables of Buyer and Seller shall have either been
waived or satisfied. Upon completed Closing on the Closing Date, Seller shall
thereafter file, or caused to be filed, with the FCC a notice of Consummation
evidencing the completed assignment. Seller and Buyer agree to cooperate to the
extent necessary to obtain the FCC’s Consent as may be required. For purposes of
this Agreement, the terms “Consent” and/or “Grant” by the FCC may be used
interchangeably and mean an action by the FCC authorizing the Assignment
Application to the Buyer which has not at the time of Closing been denied,
reversed, stayed, enjoined, set aside, annulled, or suspended, and with respect
to which action no timely request for stay, petition for rehearing, petition for
reconsideration, application for review, or notice of appeal is pending by the
Buyer. The Closing shall be held by exchange of documents via email at such time
as Seller and Buyer may agree. The date of Closing may be extended by mutual
agreement in writing between the Seller and the Buyer.

 

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3.2 FCC Permits and regulatory matters free and clear to seek FCC Consent prior
to Closing.

 

(a) Seller operates the Business subject to forbearance of domestic license
under 47 U.S.C. §214 et. al. as ruled by the FCC applicable for I-VoIP service
providers who provide interstate services. Under such forbearance, Seller
maintains the necessary FCC Form 499-A Filer ID categorized as I-VoIP service
provider to lawfully conduct and operate the Business under full force and
effect of the law and FCC permit (“FCC Permit”) which is unimpaired by any act
or omission of Seller. Seller shall not transfer its FCC Registration Number
(FRN) or its FCC Form 499-A Filer ID under the contemplated transaction and
shall maintain all responsibility for federal regulatory fees under the Federal
Communication Act of 1934, as amended (the “Act”), up and until the time of
Closing and transfer of the Purchased Assets. Buyer shall assume the Purchased
Assets under its own distinctive FRN and FCC Form 499-A Filer ID and not be
liable for any federal regulatory contribution mechanism under the Act prior to
the Closing. Seller herein warrants that it is not in default of payment of
regulatory fees under the Act and is not under Red Light status with the FCC for
failure to pay regulatory contributions and is otherwise free and clear to seek
consent from the FCC as a transferor of the Purchased Assets. Buyer herein
warrants that it is not in default of payment of regulatory fees under the Act
and is not under Red Light status with the FCC for failure to pay regulatory
contributions and is otherwise free and clear to seek consent from the FCC as a
transferee of the Purchased Assets.

 

(b) To the best of Seller’s knowledge and belief, Seller is operating the
Business in all material respects in compliance with the Seller’s FCC Permit,
the Act and all regulations and published policies of the FCC (the
“Communications Laws”). Seller has not received complaints that it has violated
the Act in the operation of the Business that may otherwise impair its transfer
and sale of the Purchased Assets to the Buyer. There is not now pending, or
threatened, any action by or before the FCC to revoke, cancel, rescind or modify
Seller’s FCC Permit. Seller has not received any notice of, and has no knowledge
of, any pending, issued, or outstanding order by or before the FCC, or of any
investigation, order to show cause, notice of violation, notice of apparent
liability, notice of forfeiture, or material complaint against the Seller or
involving the Purchased Assets. There are no pending proceedings before the FCC
regarding the status of the Business, and there has been no notice of inquiry or
order to show cause issued by the FCC regarding the Seller or the Business.
Seller has paid all FCC regulatory fees due and owing for the Business for all
years prior to the current assessable year reported in fiscal year 2020up and
until day of Closing. All material reports and filings required to be filed with
the FCC or its delegated agents by Seller with respect to the operation of the
Business have been filed, and all such reports and filings are accurate and
complete in all material respects. Seller maintains a business record for its
regulatory filings related to the Business and such record complies with the
Communications Laws in all material respects. To the best of Seller’s knowledge
and belief, Seller is free and clear to receive Consent from the FCC for the
transaction contemplated herein prior to Closing.

 

(c) To the best of Buyer’s knowledge and belief, Buyer is operating in all
material respects in compliance with applicable FCC Permits, the Act and all
regulations and published policies of the FCC (the “Communications Laws”). Buyer
Seller has not received complaints that it has violated the Act that may
otherwise impair its purchase of the Purchased Assets. There is not now pending,
or threatened, any action by or before the FCC to revoke, cancel, rescind or
modify Buyer’s FCC Permit. Buyer has not received any notice of, and has no
knowledge of, any pending, issued, or outstanding order by or before the FCC, or
of any investigation, order to show cause, notice of violation, notice of
apparent liability, notice of forfeiture, or material complaint against Buyer
that would impede FCC Consent. To the best of Buyer’s knowledge and belief,
Buyer is free and clear to obtain Consent from the FCC for the transaction
contemplated herein prior to Closing.

 

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3.3 Closing Deliverables.

 

(a) At the Closing, Seller shall deliver to Buyer the following:

 

(i) a Bill of Sale in the form of Exhibit E hereto (“Bill of Sale”) duly
executed by Seller transferring the Tangible Personal Property included in the
Purchased Assets to Buyer;

 

(ii) an Assignment and Assumption Agreement in the form of Exhibit F hereto
(“Assignment and Assumption Agreement”) duly executed by Seller, effecting the
assignment to and assumption by Buyer of the Purchased Assets;

 

(iii)a certificate of a duly authorized officer of Seller certifying (A) the
names and signatures of the officers of Seller who are authorized to sign this
Agreement and the Transaction Documents and the other documents to be delivered
hereunder and thereunder, (B) that attached thereto are true and complete copies
of all resolutions adopted by the board of directors and shareholders of Seller
who are authorizing the execution, delivery and performance of this Agreement
and the other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby, and (C) that all resolutions are in full force
and effect and are all of the resolutions adopted in connection with the
transactions adopted hereby and thereby;

 

(iv) the Master Services Agreement, Note, and Subordination Agreement in the
forms of Exhibits K, I and J hereto, duly executed by Seller;

 

(v) the Consulting Agreements in the form of Exhibit C hereto, duly executed by
Alex Gonzalez and Jose Gonzalez, respectively;

 

(vi) a Trademark Assignment Agreement in the form of Exhibit G hereto
(“Trademark Assignment Agreement”), duly executed by Seller;

 

(vii) Non-Compete Agreement in the form of Exhibit D hereto duly executed by
Seller and each of Alex Gonzalez and Jose Gonzalez;

 

(viii) Documented proof of the FCC’s Consent of the Assignment of Assets in
accord with Section 3.1 and 3.2 as evidenced by FCC Public Notice or by email
Notice from Commission staff that Consent has been granted a copy thereof
attached as Exhibit H.

 

(ix) a certificate of a duly authorized officer of Seller certifying (A) the
names and signatures of the officers of Seller authorized to sign this
Agreement, the Transaction Documents and the other documents to be delivered
hereunder and thereunder, (B) that attached thereto are true and complete copies
of all resolutions adopted by the board of directors of Seller authorizing the
execution, delivery and performance of this Agreement and the other Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby, and (C) that all such resolutions are in full force and effect and are
all of the resolutions adopted in connection with the transactions contemplated
hereby and thereby;

 

(x) a certificate, dated and duly executed as of the Closing Date, on behalf of
Seller by a duly authorized officer, certifying that each of the conditions set
forth in Section 7.2(a) and Section 7 .2(b)have been satisfied; and

 

(xi) updated Disclosure Schedules, as applicable.

 

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(b) At the Closing, Buyer shall deliver to Seller the following:

 

(i) Documented proof of the FCC’s Consent of the Assignment of Assets in accord
with Section 3.1 and 3.2 as evidenced by FCC Public Notice or by email Notice
from Commission staff that Consent has been granted a copy thereof attached as
Exhibit H.

 

(ii) the Purchase Price payment required under Section 2.1(i);

 

(iii) the Assignment and Assumption Agreement duly executed by Buyer;

 

(iv) the Consulting Agreements, Trademark Assignment Agreement, Non-Compete
Agreement, Master Services Agreement, Note and Subordination Agreement, each
duly executed by Buyer;

 

(v) a certificate of a duly authorized officer of Buyer certifying (A) the names
and signatures of the officers of Buyer authorized to sign this Agreement, the
Transaction Documents and the other documents to be delivered hereunder and
thereunder, (B) that attached thereto are true and complete copies of all
resolutions adopted by the board of directors of Buyer authorizing the
execution, delivery and performance of this Agreement and the other Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby, and (C) that all such resolutions are in full force and effect and are
all of the resolutions adopted in connection with the transactions contemplated
hereby and thereby; and

 

(vi) a certificate, dated and duly executed as of the Closing Date on behalf of
Buyer by a duly authorized officer, certifying that each of the conditions set
forth in Section 7.3(a) and Section 7.3(b) have been satisfied.

 

SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller represents and warrants to Buyer that the statements contained in this
Section 4 are true and correct as of the date hereof and as of the Closing Date.

 

4.1Organization and Qualification of Seller.  Seller is duly organized, validly
existing and in good standing under the Laws of its jurisdiction of
incorporation and has all necessary corporate or entity power and authority to
own, operate or lease the properties and assets now owned, operated or leased by
it and to carry on the Business as currently conducted and contemplated to be
conducted through Closing. Except as would not, individually or in the
aggregate, be expected to be material to the Business taken as a whole, Seller
is duly licensed or qualified to do business and is in good standing in each
jurisdiction in which the ownership of the Purchased Assets or the operation of
the Business as currently conducted makes such licensing or qualification
necessary.

 

4.2Authority of Seller.  Seller has all necessary corporate power and authority
to enter into this Agreement and the other Transaction Documents to which Seller
is a party, to carry out its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by Seller of this Agreement and any other Transaction Document to which
Seller is a party, the performance by Seller of its obligations hereunder and
thereunder and the consummation by Seller of the transactions contemplated
hereby and thereby have been duly authorized by all requisite corporate and
shareholder action on the part of Seller. This Agreement has been duly executed
and delivered by Seller, and (assuming due authorization, execution and delivery
by Buyer) constitutes a legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar Laws affecting creditors’ rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).  When each other Transaction Document to which
Seller is or will be a party has been duly executed and delivered by Seller
(assuming due authorization, execution and delivery by Buyer and each other
party thereto), such Transaction Document will constitute a legal and binding
obligation of Seller enforceable against it in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar Laws affecting creditors’ rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).

 

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4.3No Conflicts; Consents. Except assets forth in Section 4.3 of the Disclosure
Schedules, the execution, delivery and performance by Seller of this Agreement
and the other Transaction Documents to which Seller is a party, and the
consummation of the transactions contemplated hereby and thereby, do not and
will not: (a) result in a violation or breach of any provision of the
certificate of incorporation or by-laws of Seller; (b) result in a violation or
breach of any provision of any Law or Governmental Order applicable to Seller,
the Business, or the Purchased Assets ; (c) require the consent, notice or other
action by any Person under, conflict with, result in a violation or breach of,
constitute a default under or result in the acceleration of any Material
Contract; (d) require the consent, notice, vote, approval or other action by the
stockholders of Seller; or (e) result in the creation or imposition of any
Encumbrance on any Purchased Asset. Except as set forth in Section 4.3 of the
Disclosure Schedules, no consent, approval, Permit, Governmental Order,
declaration or filing with, or notice to, any Governmental Authority is required
by or with respect to Seller in connection with the execution and delivery of
this Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby.

 

4.4Financial Statements; Undisclosed Liabilities.

 

4.4.1Seller has delivered to Buyer financial statements for each of Seller’s
last three completed fiscal years and monthly financial statements for each
month of Seller’s current fiscal year through and including August2020(the
“Financial Statements”).

 

4.4.2The Financial Statements fairly and accurately present in all material
respects the financial condition and results of operations of Seller as of the
respective dates and for the periods indicated therein (subject to normal
adjustments which will not, individually or in the aggregate, be material in
nature or amount).

 

4.4.3Seller has no Liabilities against, relating to or affecting the Purchased
Assets, except (i) those which are adequately reflected or reserved against in
the Financial Statements, (ii) those which have been incurred in the ordinary
course of business since January 1,2020, and which are not, individually or in
the aggregate, material in amount, and (iii) those incurred pursuant to the
Transaction Documents and the transactions contemplated hereby.

 

4.4.4Seller is solvent for all purposes under federal bankruptcy and applicable
state fraudulent transfer and fraudulent conveyance Laws.  The sale of the
Purchased Assets by Seller hereunder will not render Seller insolvent and does
not constitute a fraudulent transfer or conveyance under such Laws.

 

4.5Absence of Certain Changes, Events and Conditions.  Except as set forth in
this Section 4.5 or in Section 4.5 of the Disclosure Schedules, from January1,
2020 until the date of this Agreement, Seller has operated the Business in the
ordinary course of business consistent with past practice in all material
respects and there has not been, with respect to the Business, any event or
circumstance that, individually or in the aggregate, has had or is reasonably
expected to have a Material Adverse Effect. Buyer and Seller mutually recognize
the occurrence of certain public health restrictions and shutdowns within the
calendar year of 2020 as an event or circumstance that has generally impacted
all businesses in the United States, but recognize that these did not impact
Seller’s Business in the same manner as other businesses and agree that
consideration of that impact has been taken into account for purposes of this
representation. Since January 1,2020, until the date of this Agreement there has
not been, in each case solely with respect to the Business unless indicated
otherwise:

 

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4.5.1any theft, damage, destruction or casualty loss in excess of $10,000 in the
aggregate to the Purchased Assets, whether or not covered by insurance;

 

4.5.2any mortgage, pledge, lien, or grant of a security interest in, or other
Encumbrance of any of the Purchased Assets;

 

4.5.3any sale, disposal of or license of any of the Purchased Assets (including,
without limitation, Intellectual Property Assets) to any Person;

 

4.5.4any failure to maintain the Tangible Personal Property in good working
condition and to repair the Tangible Personal Property according to the
standards that have been maintained up to the date of this Agreement, subject
only to ordinary wear and tear;

 

4.5.5any failure to pay and discharge any trade payables or other material
obligations relating to the Purchased Assets or the Business in accordance with
Seller’s customary business practices as of the date hereof;

 

4.5.6any amendment or termination of any Assigned Contracts, except in the
ordinary course of business;

 

4.5.7any action to terminate or modify, or permit the lapse or termination of,
the present insurance policies and coverage of Seller relating to or applicable
to the Business or the Purchased Assets;

 

4.5.8any abandonment of or failure to maintain any Intellectual Property Assets;

 

4.5.9a grant of any performance guarantee to any customer of the Business;

 

4.5.10any failure to comply in all material respects with all Laws applicable to
the conduct of the Business or the ownership and use of the Purchased Assets;
and

 

4.5.11any agreement or commitment to do any of the things described in the
preceding clauses of this Section 4.5.

 

4.6Material Contracts. Section 4.6 of the Disclosure Schedule lists each
contract of Seller which is material to the operation of the Business and by
which any of the Purchased Assets are bound or affected (“Material Contracts”)
including:

 

(i)all Contracts pursuant to which the Seller licenses data from a third party
and which are material to the Business;

 

(ii)any Contract relating to capital expenditures of the Business or other
purchases of material, supplies, equipment or other assets or properties or
services by Seller (other than purchase orders for inventory or supplies in the
ordinary course of business) in excess of $10,000 individually, or $25,000 in
the aggregate, during the 12-month period preceding the date hereof;

 

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(iii)all Contracts containing provisions (A) that expressly limit the ability of
the Business to engage in any business activity or compete with any Person, or
the expansion thereof to other geographical areas, customers, suppliers or lines
of business, (B) limiting solicitation of employees or clients, or (C) that
grants the other party or any third person “most favored nation” or similar
status; any Contract (or group of related Contracts) relating to the Business
involving payments by or to Seller of more than $10,000 individually or $25,000
in the aggregate during the 12-month period preceding the date hereof or which
is reasonably likely to require payments by or to Seller after the date hereof
in excess of such amounts;

 

(iv)any Contract pursuant to which Seller subcontracts work to third parties;

 

(v)all Contracts that are intercompany agreements relating to the Business or
the Purchased Assets;

 

(vi)any Contract (or group of related Contracts) which is not terminable on less
than ninety (90) days’ notice or that contains a minimum annual commitment in
excess of $25,000;

 

(vii)any Contract with third-party sales agents, sales representatives, brokers
or distributors, none of which are employees of Seller;

 

(viii)any Contract creating a shareholders’ agreement, strategic alliance,
partnership, joint venture agreement, development, joint development or similar
arrangement which is material to the Business;

 

(ix)any Contract entered into by Seller granting a license or other grant of
rights to any third party for the use of any Intellectual Property Assets and
any Contract entered into by Seller in which a license or other grant of rights
is provided to Seller for the use of any intellectual property rights of any
third party (other than off-the-shelf, commercially available Software) for the
Business, in each case including, without limitation, royalty Contracts or
management, consulting or advisory contracts (collectively, the “Material IP
Contracts”);

 

(x)any Contract granting any Person an Encumbrance on any of the Purchased
Assets, other than Permitted Encumbrances;

 

(xi)any Contracts with any Governmental Authority, including the Federal
Communications Commission(“FCC”) , including those for settlement of violations,
conditional permits, or resolution of regulatory debt, if any;

 

(xii)any Contract that relates to the settlement of any legal proceeding; and

 

  (xiii)any Contract not listed above that is material to the Business.

 

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4.6.1Seller has made available to Buyer true and complete copies of all Material
Contracts and all amendments thereto. All Material Contracts necessary for the
operation of the Business, are being assigned to and assumed by Buyer. For the
avoidance of doubt, none of the Excluded Assets are necessary for the operation
of the Business. Except as would not, individually or in the aggregate, be
expected to be material to the Business taken as a whole, each Material Contract
(i) is valid and binding on Seller and, to the Knowledge of Seller, the
counterparties thereto and is in full force and effect, enforceable against
Seller, and, to the Knowledge of Seller, against all third parties, in each case
in accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general principles of equity (regardless of
whether considered in a proceeding in equity or at law); and (ii) shall continue
in full force and effect upon consummation of the transactions contemplated by
this Agreement, and enforceable against Buyer, and, to the Knowledge of Seller,
against all third parties, in accordance with its terms.  Except as set forth in
Section 4.6.1 of the Disclosure Schedules, Seller is not in material breach of,
or default (with or without the giving of notice, lapse of time or both) under,
any Material Contract.  To the Knowledge of Seller, no other party to any
Material Contract is in breach or default thereunder, or, to the Knowledge of
Seller, does any condition exist that with the lapse of time or both would
constitute a default by any such other party thereunder.  No other party to any
Material Contract has (i) notified Seller that such other party intends to
cancel or otherwise terminate such Material Contract or (ii) since January
1,2020, taken any action or threatened to take any action, with respect to
seeking a repayment of amounts paid to Seller pursuant to such Material Contract
or a reduction in fees or other payments that will become due to Seller pursuant
to such Material Contract.

 

4.7Title to Tangible Personal Property.  Seller has good, valid title and
marketable title to, or a valid leasehold interest in all Tangible Personal
Property included in the Purchased Assets, free and clear of Encumbrances except
as set forth in Section 4.7 of the Disclosure Schedules and for Permitted
Encumbrances. Except as would not, individually or in the aggregate, be expected
to be material to the Business taken as a whole, all Tangible Personal Property
included in the Purchased Assets are structurally sound, are in good operating
condition and repair, and are suitable for their current and intended use,
ordinary wear and tear excepted. Except as would not, individually or in the
aggregate, be expected to be material to the Business taken as a whole, none of
such Tangible Personal Property is in need of maintenance or repairs except for
ordinary, routine maintenance and repairs that are not material in nature.

 

4.8Sufficiency of Assets. The Purchased Assets (including, without limitation,
the Material Contracts), (i) constitute all the rights, property and assets
necessary and sufficient for the continued conduct of the Business after the
Closing by Buyer as currently conducted and as currently proposed to be
conducted by Seller prior to the Closing, and (ii) there are no material assets,
assets, properties or rights used in, held for use, or relied upon for the
conduct of the Business other than the Purchased Assets.  The Material Contracts
listed in Section 4.6 of the Disclosure Schedules include all Contracts with any
customer of the Business.

 

4.9Real Property. The Purchased Assets include no real property or leases of
real property.

 

4.10Intellectual Property.

 

4.10.1Exhibit Assets forth an accurate and complete list of (i) all Domain Names
utilized in the Business of which Seller is the registrant or beneficial owner
(collectively, the “Business Registered Domain Names”); (ii) all registered
Marks utilized in the Business (collectively, the “Business Registered Marks”
and, together with the Business Registered Domain Names, the “Business
Registered IP”).Except as and to the extent disclosed on Section 4.10.1 of the
Disclosure Schedules, Seller has timely paid all filing, extension, examination,
issuance, post registration and maintenance fees, annuities and the like
associated with or required with respect to any of the Business Registered IP,
and all documents, assignments, recordations and certificates necessary to be
filed by Seller to maintain the effectiveness of the Business Registered IP and
to secure and record title to Business Registered IP have been filed with the
relevant trade mark or other authorities so that no item listed on Exhibit A has
lapsed, expired or been abandoned or canceled other than in the ordinary course
of business.

 

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4.10.2To the Knowledge of Seller, all Intellectual Property in which Seller has
rights and which are material to the conduct of the Business(i) are valid and
enforceable and (ii) are not subject to any outstanding injunction, judgment,
order, decree, ruling or charge, including allegations of infringement, against
Seller of which Seller has received notice.

 

4.10.3Seller owns all right, title and interest in and to the Business
Registered IP and is entitled to use such Business Registered IP in the
operation of the Business as currently conducted, free and clear of all
Encumbrances other than Permitted Encumbrances.

 

4.10.4Except with respect to the Assigned Contracts and licenses of commercial
off-the-shelf Software available on reasonable terms for a license fee of no
more than $25,000 per annum, Seller is not obligated to make any payments by way
of royalties, fees or otherwise to any owner or licensor of, or other claimant
to, any intellectual property rights, with respect to the use thereof or in
connection with the conduct of the Business as currently being conducted
(including all research and development).

 

4.10.5To the Knowledge of Seller, the conduct of the Business as currently
conducted, does not infringe upon or misappropriate or violate the Intellectual
Property of any third party. Seller has not received notice of any claim or
notice asserting that the conduct of the Business by Seller as currently
conducted infringes upon or misappropriates the Intellectual Property of any
third party.

 

4.10.6There are no claims asserted or threatened by Seller that a third party
infringes or otherwise violates any of the Business Registered IP or any other
rights protecting Intellectual Property owned by or exclusively licensed to
Seller.  To the Knowledge of Seller, no third party is misappropriating,
infringing or violating any Intellectual Property owned by or exclusively
licensed to Seller.

 

4.10.7The Business Registered IP is sufficient for the continued conduct of the
Business by Buyer after the Closing Date in the same manner as such business was
conducted prior to the Closing Date in all material respects. Neither the
execution of this Agreement nor the consummation of any transaction contemplated
hereby will materially and adversely affect any of Buyer’s rights in and to the
Intellectual Property Assets.

 

4.10.8The software of Seller included in the Intellectual Property Assets does
not, to the Knowledge of Seller, contain any program routine, device, or other
undisclosed feature, including, without limitation, a time bomb, virus, software
lock, drop-dead device, malicious logic, worm, trojan horse, bug, error, defect
or trap door, that deletes, disables, deactivates, interferes with, or otherwise
harms such software, or the hardware, data, or computer programs or codes, or
that provides access or produces modifications not authorized by Seller.

 

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4.11Legal Proceedings; Governmental Orders.

 

4.11.1There are no Actions or other legal proceedings pending or, to the
Knowledge of Seller, threatened in writing against or by Seller relating to or
affecting the Business, the Purchased Assets, or that would affect the legality,
validity or enforceability of this Agreement or any Transaction Documents or the
consummation of the transactions contemplated hereby or thereby. No event has
ocurred or circumstances exist that may give rise to, or serve as a basis for,
any such Action or other legal proceeding.

 

4.11.2There are no outstanding Governmental Orders or inquiries pending before a
Governmental Authority or, to the Knowledge of Seller, threatened in writing
against Seller and no unsatisfied judgments, penalties or awards against,
relating to or affecting the Business or the Purchased Assets, or that would
affect the legality, validity or enforceability of this Agreement or any
Transaction Documents or the consummation of the transactions contemplated
hereby or thereby. No event has occurred or circumstances exist that may
constitute or result in (with or without notice or lapse of time) a violation of
any such Governmental Order.

 

4.12Compliance With Laws; Permits.

 

4.12.1Seller is in compliance with all Laws applicable to the conduct of the
Business as currently conducted and the ownership and use of the Purchased
Assets, and Seller has been in compliance with all Laws applicable to the
Business and the ownership and use of the Purchased Assets during the two (2)
years prior to the date hereof except as would not, individually or in the
aggregate, be expected to be material to the Business taken as a whole. Seller
has not received any written notice that any violation of the foregoing is being
alleged.

 

4.12.2Except for general authorizations to conduct business or as set forth in
Section 4.12.2 of the Disclosure Schedules, no Permits are required for Seller
to conduct the Business as currently conducted or for the ownership and use of
the Purchased Assets.

 

4.13Taxes.

 

4.13.1Seller has filed (taking into account any valid extensions) all Tax
Returns with respect to the Business and Purchased Assets required to be filed
by Seller, including Seller’s consolidated corporate tax returns for 2017, 2018
and 2019.  Such Tax Returns were true, complete and correct in all material
respects. All Taxes due and owing by Seller (whether or not shown on any Tax
Return) have been paid. Seller has provided Buyer with a draft of its
consolidated tax return for 2019.

 

4.13.2Seller has withheld and paid each Tax required to have been withheld and
paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, customer, shareholder or other party, and complied with
all information reporting and backup withholding provisions of applicable Law.

 

4.13.3There are no Encumbrances for Taxes upon any of the Purchased Assets nor,
to the Knowledge of Seller is any Governmental Authority in the process of
imposing any Encumbrances for Taxes on any of the Purchased Assets, other than
Permitted Encumbrance

 

4.13.4Seller is not currently a party to any pending examination, audit, Action,
administrative or judicial proceeding relating to Taxes, nor, to the Knowledge
of Seller, has any examination, audit, Action or proceeding been threatened in
writing by any Governmental Authority, and no claim for assessment or collection
of Taxes which previously has been asserted relating in whole or in part to
Seller that remains unpaid.

 

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4.14Brokers. No broker, finder, investment banker or similar Person is entitled
to any brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement or any other Transaction Document
based upon arrangements made by or on behalf of Seller.

 

4.15Operation of the Business.  No part of the Business is currently operated
through any entity other than Seller.

 

4.16Customers and Suppliers.

 

4.16.1Section 4.16.1 of the Disclosure Schedules sets forth (i) each customer
that accounted for more than five percent (5%) of the consolidated gross
revenues of the Business during the 12-month period ended April 30, 2020(each, a
“Material Customer”) and (iii) the amounts paid by such Material Customers to
the Business during the 12 months immediately preceding the date hereof. Except
as set forth in Section 4.16.1 of the Disclosure Schedules, no Material Customer
has canceled or otherwise terminated, or materially reduced, or made any threat
in writing (or, to the Knowledge of Seller, orally) to Seller to cancel or
otherwise terminate, or materially reduce, its relationship with Seller and (ii)
this Agreement and the Transaction Documents and the consummation of the
transactions contemplated hereby and thereby will not materially and adversely
affect the relationship of Buyer with any Material Customer.

 

4.16.2Section 4.16.2 of the Disclosure Schedules sets forth (i) the top 10
suppliers of the Business (calculated based on purchases from suppliers during
the 12 months immediately preceding the date hereof) (each, a “Material
Supplier”) and (ii) the amounts paid to such Material Suppliers by the Business
during the 12 months immediately preceding the date hereof. Except as set forth
in Section 4.16.2 of the Disclosure Schedules no Material Supplier has canceled
or otherwise terminated, or materially reduced, or made any threat in writing
(or, to the Knowledge of Seller, orally) to Seller to cancel or otherwise
terminate, or materially reduce, its relationship with Seller and (ii) this
Agreement and the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby will not materially and adversely affect the
relationship of Buyer with any Material Suppler.

 

4.17Receivables.  Except as set forth in Section 4.17 of the Disclosure
Schedules, (i) all Receivables represent bona fide, third party (i.e.,
non-Affiliate) and valid obligations arising from services actually performed in
the ordinary course of business, (ii) all such Receivables are or will be at
Closing current within at least 90 days and collectible and (iii) there is no
contest, Claim or right of set-off, other than returns in the ordinary course of
business, pursuant to any Contract with any obligor of any Receivables related
to the amount or validity of such Receivable and, to the Knowledge of Seller, no
bankruptcy, insolvency or similar proceedings have been commenced by or against
any such obligor which, individually or in the aggregate, involves an amount in
excess of $10,000.

 

4.18Compliance with Money Laundering Laws.  The operations of the Business by
Seller has been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the applicable money laundering
statutes of all jurisdictions where Seller operates the Business, the applicable
rules and regulations thereunder and any applicable, related or similar rules,
regulations or guidelines, issued, administered or enforced by any Governmental
Authority (collectively, the “Money Laundering Laws”) and no Action or
proceeding by or before any court or Governmental Authority or body or any
arbitrator involving Seller with respect to any applicable Money Laundering Laws
is pending or, to the Knowledge of Seller, threatened.

 

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4.19Insurance.  Seller maintains and has maintained without interruption during
the two (2) years prior to the date hereof, policies or binders of insurance
covering risks and events in amounts which Sellers determined to be adequate for
the Business. With respect to any insurance policies maintained by Seller with
respect to the Purchased Assets and Business for periods prior to the Closing,
(a) there is no material claim pending as to which coverage has been questioned,
denied or disputed by the underwriters of such policies, and (b) Seller is in
compliance in all material respects with the terms of such policies including,
without limitation, the payment of all premiums due with respect to such
policies.

 

4.20Disclosure.  No representation or warranty made by Seller contained in this
Agreement, and no statement contained in the Disclosure Schedules or in any
certificate furnished to Buyer pursuant to any provision of this Agreement,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements herein or therein, in the light
of the circumstances under which they were made, not misleading in any material
respect.  Seller acknowledge and agrees that, in making its decision to enter
into this Agreement and to consummate the transactions contemplated hereby,
Buyer has relied on the representations and warranties set forth in this
Section 4.20 and in the other subsections of Section 4 of this Agreement
(including related portions of the Disclosure Schedules), and the accuracy and
completeness of the representations and warranties in this Section 4.20 and in
the other subsections of Section 4 of this Agreement (including related portions
of the Disclosure Schedules) are a major inducement to Buyer’s decision to enter
into this Agreement and to consummate the transactions contemplated hereby.

 

SECTION 5 REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer represents and warrants to Seller that the statements contained in this
Section 5 are true and correct as of the date hereof and as of the Closing Date.

 

5.1Organization of Buyer. The Buyer is duly organized, validly existing and in
good standing under the Laws of the State of Delaware.

 

5.2Authority of Buyer. Buyer has all necessary organizational power and
authority to enter into this Agreement and the other Transaction Documents to
which Buyer is a party, to carry out its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery by Buyer of this Agreement and any other Transaction
Documents to which Buyer is a party, the performance by Buyer of its obligations
hereunder and thereunder and the consummation by Buyer of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
organizational power on the part of Buyer. This Agreement has been duly executed
and delivered by Buyer, and (assuming due authorization, execution and delivery
by Seller) this Agreement constitutes a legal, valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar Laws affecting creditors’ rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). When each other Transaction Document to which
Buyer is or will be a party has been duly executed and delivered by Buyer
(assuming due authorization, execution and delivery by Seller and each other
party thereto), such Transaction Document will constitute a legal and binding
obligation of Buyer enforceable against it in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar Laws affecting creditors’ rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).

 

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5.3No Conflicts; Consents.  The execution, delivery and performance by Buyer of
this Agreement and the other Transaction Documents to which Buyer is a party,
and the consummation of the transactions contemplated hereby and thereby, do not
and will not: (a) result in a violation or breach of any provision of any
organizational document of Buyer; (b) result in a violation or breach of any
provision of any Law or Governmental Order applicable to Buyer; or (c) require
the consent, notice or other action by any Person under, conflict with, result
in a violation or breach of, constitute a default under or result in the
acceleration of any agreement to which Buyer is a party, except in the cases of
clauses (b) and (c), where the violation, breach, conflict, default,
acceleration or failure to give notice would not have a Material Adverse Effect
on Buyer’s ability to consummate the transactions contemplated hereby. No
consent, approval, Permit, Governmental Order, declaration or filing with, or
notice to, any Governmental Authority is required by or with respect to Buyer in
connection with the execution and delivery of this Agreement and the other
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby, except for such consents, approvals, Permits, Governmental
Orders, declarations, filings or notices which would not have a Material Adverse
Effect on Buyer’s ability to consummate the transactions contemplated hereby and
thereby.

 

5.4Brokers. Buyer has not used a broker, finder or investment banker in
connection with the transactions contemplated hereby, and Buyer shall not have
any Liability or otherwise suffer or incur any loss as a result of or in
connection with any brokerage, finder’s fee, investment banker’s fee or other
commission of any Person retained by Seller in connection with this Agreement,
the Transaction Documents or any of the transactions contemplated hereby and
thereby (or any Person who is entitled to any broker’s commission, finder’s fee,
investment banker’s fee or similar payment).

 

5.5Legal Proceedings. There are no Actions or other legal proceedings pending
or, to Buyer’s knowledge, threatened in writing against or by Buyer or any
Affiliate of Buyer that challenge or seek to prevent, enjoin or otherwise delay
the transactions contemplated by this Agreement.

 

5.6FCC Matters. Subject to Section 3.2, Buyer has filed an assignment of assets
application with the FCC with respect to the transfer of the subscriber Customer
Base for the assets held by Seller and upon grant of consent is lawfully
eligible for Closing and assignment and transfer of the Purchased Assets.

 

SECTION SIX COVENANTS

 

6.1Conduct of Business by Seller Prior to the Closing.  Except as otherwise
required by this Agreement or applicable Law, during the period on and from the
date of this Agreement through and including the Closing Date or the termination
of this Agreement, Seller shall (i) conduct the Business in the ordinary course
consistent with past practices in all material respects, (ii) maintain and
preserve intact the current organization, operations and franchise of the
Business, (iii) use its commercially reasonable efforts to preserve goodwill and
relationships of its employees customers, lenders, suppliers, regulators and
others having relationships with the Business.  Except as otherwise required by
this Agreement or applicable Law, during the period on and from the date of this
Agreement through and including the Closing Date or the termination of this
Agreement, Seller will not, without the prior written consent of Buyer (not to
be unreasonably withheld, conditioned or delayed), in each case solely with
respect to the Business:

 

(a) mortgage, pledge, subject to a lien, or grant a security interest in, or
suffer to exist or otherwise encumber, any of the Purchased Assets, excluding
guarantees and letters of credit provided to customers in the ordinary course of
business or any Encumbrances existing on the date hereof;

 

(b) sell, dispose of or license any of the Purchased Assets to any Person;

 

(c) fail to maintain the Tangible Personal Property in good working condition
and repair according to the standards they have maintained up to the date of
this Agreement, subject only to ordinary wear and tear;

 

(d) fail to pay and discharge any trade payables or other material obligations
relating to the Purchased Assets or the Business in accordance with Seller’s
customary business practices as of the date hereof;

 

(e) amend or terminate any Assigned Contracts;

 

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(f) incur any Indebtedness or guarantee Indebtedness of another Person;

 

(g) take any action to terminate or modify, or permit the lapse or termination
of, the present insurance policies and coverage of Seller relating to or
applicable to the Business or the Purchased Assets;

 

(h) enter into, modify, amend, terminate or waive any material right or
obligation under any Contract that would constitute a Material Contract related
to the Business;

 

(i) abandon or fail to maintain any Intellectual Property Assets;

 

(j) grant any performance guarantee to any customer of the Business; or

 

(k) fail to comply in all material respects with all Laws applicable to the
conduct of the Business or the ownership and use of the Purchased Assets.

 

6.2Access to Information.  From the date hereof until the Closing or the
termination of this Agreement, Seller shall (a) afford Buyer and its
representatives reasonable access to and the right to inspect all of the
properties, assets, premises, books and records, Assigned Contracts and other
documents and data related to the Business; (b) furnish Buyer and its
representatives with such financial, operating and other data and information
related to the Business as Buyer or any of its representatives may reasonably
request; and (c) instruct its representatives to cooperate with Buyer with
respect to the foregoing; provided, however , that any such investigation shall
be conducted during normal business hours upon reasonable advance notice to
Seller, under the supervision of Seller’s personnel and in such a manner as not
to interfere with the conduct of the Business or any other businesses of Seller.
All requests by Buyer for access pursuant to this Section 6.2 shall be submitted
or directed exclusively to Seller or such other individuals as Seller may
designate in writing from time to time. Prior to the Closing, without the prior
written consent of Seller, Buyer shall not contact any suppliers to, or
customers of, the Business.

 

6.3Confidentiality.  Each party acknowledges and agrees that the
Confidentiality/Non-Disclosure Agreement between Seller and Buyer dated
September 4,2019 (“Confidentiality Agreement”) remains in full force and effect
and information provided pursuant to this Agreement and the transactions
contemplated hereby shall remain subject to the Confidentiality Agreement;
provided, however, that notwithstanding anything in this Agreement to the
contrary, Buyer and/or Seller may make any disclosure to the extent it is
required to do so to comply with any securities laws . If this Agreement is, for
any reason, terminated prior to the Closing, the Confidentiality Agreement and
the provisions of this Section 6.3 shall nonetheless continue in full force and
effect.

 

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6.4Further Assurances.  Following the Closing, each of the parties hereto shall,
and Seller shall cause its Affiliates to, execute and deliver such additional
documents, instruments, conveyances and assurances and take such further actions
as may be reasonably required to carry out the provisions hereof and give effect
to the transactions contemplated by this Agreement and the other Transaction
Documents, including without limitation that Seller or its Affiliates, as
applicable, shall instruct all account debtors with respect to Receivables
constituting Purchased Assets to pay such amounts to Buyer and, if Seller or its
Affiliates, as applicable, receive payment of any such Receivables, they shall
remit such amounts to Buyer on a weekly basis. For the avoidance of doubt,
nothing in this Section 6.4 shall require either party to waive any of its
rights under this Agreement.

 

6.5Third Party Consents.  Seller shall use commercially reasonable efforts to
give all notices, obtain all consents and to and make all filings with third
parties that are described in Section 4.3 of the Disclosure Schedules.

 

6.6Closing Conditions.  From the date hereof until the Closing, each party
hereto shall use commercially reasonable efforts to take such actions as are
necessary to expeditiously satisfy the closing conditions set forth in Section 7
hereof.

 

6.7Termination of Related Party Agreements. Except for the Consulting
Agreements, Buyer is not required to employ or engage any officers, directors or
employees of Seller following the Closing. Seller shall bear sole responsibility
for the termination of and all obligations under all contracts between Seller
and its employees or Affiliates pertaining to the Business.

 

6.8Trademark Matters.  From and after the Closing:

 

i.The parties acknowledge and agree that Buyer has purchased and the Seller has
sold and assigned to Buyer all right, title and interest in and to the Marks,
the goodwill of the business associated therewith and all applications and
registrations therefore, and associated Domain Names of the Business related to
the Customer Base.  Seller agrees that, as between the parties, Buyer is the
sole and exclusive owner of all right, title and interest in the Marks.  Seller
shall not (and shall cause its Affiliates, representatives and contractors not
to) use directly or indirectly the Marks or any colorable imitation thereof, or
contest Buyer’s ownership of the validity of the Marks, including in any claim,
action, arbitration, suit, inquiry or proceeding.

 

6.9Advise of Changes.  Seller shall promptly advise Buyer of (a) any notice or
other communication from any person alleging that the consent of such person is
or may be required in connection with the transactions contemplated by this
Agreement, (b) any notice or other communication from any Governmental Authority
in connection with the transactions contemplated by this Agreement, (c) any
Actions commenced, or to Seller’s Knowledge, threatened in writing, against
Seller or any of its Subsidiaries, as applicable, that are related to the
transactions contemplated by this Agreement, and (d) any fact, change, event or
circumstance known to Seller, any breach, inaccuracy or misrepresentation of a
representation or warranty of Seller set forth in this Agreement or any breach
or non-performance of a covenant or obligation of Seller set forth in this
Agreement (i) that has had or would reasonably be expected to have, either
individually or in the aggregate with all other such matters, a Material Adverse
Effect, or (ii) which Seller believes would or would be reasonably expected to
cause a condition to Closing set forth in Section 7 to not be satisfied. In no
event shall (x) the delivery of any notice by Seller pursuant to
this Section 6.9 limit or otherwise affect the respective rights, obligations,
representations, warranties, covenants or agreements of Seller or the conditions
to the obligations of Seller under this Agreement, or (y) disclosure by Seller
be deemed to amend or supplement the Disclosure Schedules or constitute an
exception to any representation or warranty.

 

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6.10Non-Competition/Non-Solicitation Covenant of Seller. Seller hereby covenants
and agrees that for a period of three years from the Closing Date, Seller will
(i)not engage, directly or indirectly, in any business which competes with the
Business, or (ii) not directly or indirectly suggest, request or encourage any
employees, consultants, suppliers or customers of Seller to curtail, reduce, or
cancel their employment, engagement, involvement or business done with Buyer.

 

SECTION 7. CONDITIONS TO CLOSING

 

Section 7.1 Conditions to Obligations of All Parties. The obligations of each
party to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of the following
condition: No Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any Governmental Order that is in effect and has the effect
of making the transactions contemplated by this Agreement illegal, otherwise
restraining or prohibiting consummation of such transactions or causing any of
the transactions contemplated hereunder to be rescinded following completion
thereof.

 

Section 7.2 Conditions to Obligations of Buyer.  The obligation of Buyer to
consummate the transactions contemplated by this Agreement shall be subject to
Section 3.2 and the fulfillment or Buyer’s waiver, at or prior to the Closing,
of each of the following conditions:

 

(a) The representations and warranties of Seller contained in Section 4 shall be
true and correct in all material respects as of the Closing Date, in each case,
with the same effect as though made at and as of such date (except those
representations and warranties that address matters only as of a specified date,
which shall be true and correct in all material respects as of that specified
date); provided , however , that representations and warranties qualified by
Material Adverse Effect or other materiality qualifier must instead be true and
correct in all respects;

 

(b) Seller shall have duly performed and complied in all material respects with
all agreements and covenants required by this Agreement to be performed or
complied with by Seller prior to or at the Closing;

 

(c) Seller shall have delivered to Buyer duly executed counterparts to the
Transaction Documents (other than this Agreement and the Consulting Agreements)
and such other documents and deliverables set forth in Section 3.3(a);

 

(d) Buyer has obtained the prior Consent of the FCC to assign the assets
contemplated herein to itself from the Seller;

 

(e) Buyer shall have received a certificate, dated the Closing Date and signed
on behalf of Seller by a duly authorized officer, that each of the conditions
set forth in Section 7.2(a)and Section 7.2(b) have been satisfied (the “Closing
Certificate”); and

 

(e) Buyer shall have received a certificate, dated the Closing Date and signed
on behalf of Seller by a duly authorized officer of Seller as to the matters set
forth in Section 3.3(a)(iii).

 

Section 7.3 Conditions to Obligations of Seller.  The obligations of Seller to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment or Seller’s waiver, at or prior to the Closing, of each of the
following conditions:

 

(a) The representations and warranties of Buyer contained in Section 5 shall be
true and correct in all material respects as of the Closing Date with the same
effect as though made at and as of such date (except those representations and
warranties that address matters only as of a specified date, which shall be true
and correct in all material respects as of that specified date); provided,
however, that representations and warranties qualified by Material Adverse
Effect or other materiality qualifier must instead be true and correct in all
respects;

 

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(b) Buyer shall have duly performed and complied in all material respects with
all agreements and covenants required by this Agreement to be performed or
complied with by it prior to or at the Closing;

 

(c) Buyer shall have delivered to Seller the Purchase Price payment referenced
in Section 2.1(i), duly executed counterparts to the Transaction Documents
(other than this Agreement) and such other documents and deliveries set forth in
Section 3.3(b);

 

(d) Seller shall have received a certificate, dated the Closing Date and signed
on behalf of Buyer by a duly authorized officer of Buyer, , that each of the
conditions set forth in Section 7.3(a) and Section 7.3(b) have been satisfied
(the “Buyer Closing Certificate”); and

 

(e) Seller shall have received a certificate, dated the Closing Date and signed
on behalf of Buyer by a duly authorized officer of Buyer as to matters set forth
in Section 3.3(b)(iv).

 

SECTION 8. INDEMNIFICATION

 

Section 8.1 Survival. Subject to the limitations and other provisions of this
Agreement, the representations and warranties contained herein shall survive the
Closing and shall remain in full force and effect until the date that is fifteen
(15) months from the Closing Date (the “Expiration Date”); provided, however,
(i) that the representations and warranties contained in Section 4.1
(Organization and Qualification of Seller), Section 4.2 (Authority of Seller),
Section 4.7 (Title to Tangible Personal Property), Section 4.8 (Sufficiency of
Assets), Section 4.13 (Taxes) and Section 4.14 (Brokers) (collectively, the
“Seller Fundamental Representations”), and Section 5.1 (Organization of Buyer),
Section 5.2 (Authority of Buyer) and Section 5.4 (Brokers) (collectively, the
“Buyer Fundamental Representations”) shall survive the Closing indefinitely, and
(ii) the representations and warranties contained in Section 4.10 (Intellectual
Property) ( the “Seller IP Representations”) shall survive the Closing and shall
remain in full force and effect indefinitely. None of the covenants or other
agreements contained in this Agreement shall survive the Closing Date other than
those which by their terms contemplate performance after the Closing Date, and
each such surviving covenant and agreement shall survive the Closing for the
period contemplated by its terms (the applicable period of survival with respect
to any representation, warranty, covenant or agreement, the “Survival Period”).
Notwithstanding the foregoing, any claims asserted in good faith with reasonable
specificity (to the extent known at such time) and in writing by notice from the
non-breaching party to the breaching party prior to the Expiration Date of the
applicable survival period shall not thereafter be barred by the expiration of
such survival period and such claims shall survive until finally resolved.  It
is the express intent of the parties that, if the applicable Survival Period is
shorter than the statute of limitations that would otherwise have been
applicable to such item, then, by contract, the applicable statute of
limitations with respect to such item shall be reduced to the shortened Survival
Period contemplated hereby.

 

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Section 8.2 Indemnification By Seller. After the Closing, subject to the other
terms and conditions of this Section 8, Seller shall indemnify Buyer and its
Affiliates (collectively, the “Buyer Indemnified Parties”) against, and shall
hold Buyer Indemnified Parties harmless from and against, any and all Losses
incurred or sustained by, or imposed upon, the Buyer Indemnified Parties based
upon, arising out of, with respect to or by reason of:

 

(a) any inaccuracy in or breach of any of the representations or warranties of
Seller contained in this Agreement or in any Transaction Document (for purposes
of calculating any losses arising from such inaccuracy or breach and for
purposes of determining whether there has been an inaccuracy in or breach of any
such representation or warranty, such representation and warranty shall be read
as if it were not qualified by any concept of “material,” “materiality,”
“Material Adverse Effect,” or similar qualifiers);

 

(b) any breach or non-fulfillment of any covenant, agreement or obligation to be
performed by Seller pursuant to this Agreement or in any Transaction Document;

 

(c) any Third Party Claims related to the Business, operations, properties,
assets or obligations of Seller or any of its Affiliates conducted, existing or
arising before the Closing;

 

(d) any Excluded Asset or any Liabilities of Seller;

 

(e) any claim made by any stockholder of Seller against any Buyer Indemnified
Party directly or indirectly related to the Transaction Documents and
consummation of the transactions contemplated hereby and thereby; or

 

(f) any Third Party Claim arising out of or in connection with Buyer’s use of a
mark containing “ActivePBX”.

 

Section 8.3 Indemnification By Buyer.  After the Closing, subject to the other
terms and conditions of this Section 8, Buyer shall indemnify Seller and its
Affiliates (collectively, the “Seller Indemnified Parties”) against, and shall
hold the Seller Indemnified Parties harmless from and against, any and all
Losses incurred or sustained by, or imposed upon, the Seller Indemnified Parties
based upon, arising out of, with respect to or by reason of:

 

(a) any inaccuracy in or breach of any of the representations or warranties of
Buyer contained in this Agreement or in any Transaction Document (for purposes
of calculating any losses arising from such inaccuracy or breach and for
purposes of determining whether there has been an inaccuracy in or breach of any
such representation or warranty, such representation and warranty shall be read
as if it were not qualified by any concept of “material,” “materiality,”
“Material Adverse Effect,” or similar qualifiers);

 

(b) any breach or non-fulfillment of any covenant, agreement or obligation to be
performed by Buyer pursuant to this Agreement or in any Transaction Document; or

 

(c) any Third Party Claims related to the Business, operations, properties,
assets or obligations of Buyer or any of its Affiliates conducted or arising
after the Closing.

 

Section 8.4 Certain Limitations. The indemnification provided for in Section 8.2
and Section 8.3 shall be subject to the following limitations:

 

(a) The aggregate amount of losses for which the Buyer Indemnified Parties or
Seller Indemnified Parties, as applicable, shall be entitled to indemnification
pursuant to this Section 8 shall not exceed $200,000 (the “Indemnification
Cap”), other than with respect to the following: (x)(i) claims based on breaches
in, or inaccuracies of, the Seller Fundamental Representations or the Seller IP
Representations, (ii) claims arising under Section 8.2(b) through and including
8.2(f), and (iii) claims based on fraud, criminal activity or willful misconduct
of Seller (the claims described in clauses (i), (ii), and (iii), the “Seller
Special Indemnification Matters”) and (y)(i) claims based on breaches of the
Buyer Fundamental Representations, (ii) claims arising under Sections 8.3(b)
through and including 8.03(d), and (iii) claims based on fraud, criminal
activity or willful misconduct of Buyer (the claims described in clauses (i),
(ii) and (iii), the “Buyer Special Indemnification Matters”).

 

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(b) Seller shall not be liable to the Buyer Indemnified Parties for
indemnification under Section 8.2 unless and until the aggregate amount of
losses in respect of indemnification under Section 8.2 exceed $25,000(the
“Threshold”) (provided that any individual or series of related losses which do
not exceed $5,000 (“De-Minimis Losses”) shall not be counted towards the
Threshold), at which time the Buyer Indemnified Party shall be indemnified for
the amount of losses in excess of the Threshold, including, for the avoidance of
doubt, De-Minimis Losses; provided, however, that the Threshold and the
exclusion of De-Minimis Losses shall not be applicable with respect to, and each
Buyer Indemnified Party shall be entitled to be indemnified for, all losses
arising out of or resulting from the indemnification obligation with respect to
Seller Special Indemnification Matters. Buyer shall not be liable to the Seller
Indemnified Parties for indemnification under Section 8.3 unless and until the
aggregate amount of losses in respect of indemnification under Section 8.3
exceeds the Threshold (provided that De-Minimis Losses shall not be counted
towards the Threshold), at which time the Seller Indemnified Party shall be
indemnified for the amount of losses in excess of the Threshold, including, for
the avoidance of doubt, De-Minimis Losses; provided, however, that the Threshold
and the exclusion of De-Minimis Losses shall not be applicable with respect to,
and each Seller Indemnified Party shall be entitled to be indemnified for, all
losses arising out of or resulting from the indemnification obligation with
respect to Buyer Special Indemnification Matters.

 

(c) Payments by the Indemnifying Party (as defined in Section 8.5) pursuant to
Section 8 in respect of any loss shall be limited to the amount of any liability
or damage that remains after deducting from any insurance proceeds and any
indemnity, contribution or other similar payment actually received by the
Indemnified Party (as defined in Section 8.5) in respect of any such claim. 

 

(d) Notwithstanding the foregoing, in no event shall the Indemnifying Party be
liable to the Indemnified Party for any punitive, incidental, consequential,
special or indirect damages, including loss of future revenue or income, loss of
business reputation or opportunity relating to the breach or alleged breach of
this Agreement, or any damages based on any type of multiple except to the
extent adjudicated and owed to a third party with respect to a Third Party
Claim.

 

(e) Each Indemnified Party shall take, and cause its Affiliates to take, all
reasonable steps to mitigate any loss, including by pursuing insurance claims
and claims against third parties, and shall reasonably consult and cooperate
with the Indemnifying Party with a view toward mitigating losses upon becoming
aware of any event or circumstance that would be reasonably expected to, or
does, give rise to losses. 

 

Section 8.5 Indemnification Procedures.  The party making a claim under this
Section 8 is referred to as the “Indemnified Party”, and the party against whom
such claims are asserted under this Section 8 is referred to as the
“Indemnifying Party”.  Under circumstances where Seller is the Indemnifying
Party, to the extent available, prior to any obligation of Seller to Buyer by
reason of breaches by Seller of the representations and warranties contained in
Section 4 of this Agreement, the Indemnified Party will first exhaust and seek
indemnity payments from the Holdback Amount prior to seeking alternative
remedies.

 

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(a) Third Party Claims.  If any Indemnified Party receives written notice of the
assertion or commencement of any Action or other legal proceeding made or
brought by any Person who is not a party to this Agreement or an Affiliate of a
party to this Agreement or a Representative of the foregoing (a “Third Party
Claim”) against such Indemnified Party, the Indemnified Party shall give the
Indemnifying Party prompt written notice thereof (a “Claim Notice”). The failure
to give such prompt written notice shall not, however, relieve the Indemnifying
Party of its indemnification obligations. Such Claim Notice shall describe the
Third Party Claim in reasonable detail, shall include a copy of all papers
served with respect to such Third Party Claim, if any, and any other documents
reasonably necessary (as determined by the Indemnified Party) and shall indicate
the estimated amount, if reasonably practicable, of the Loss that has been or
may be sustained by the Indemnified Party. The Indemnifying Party shall have the
right to participate in or, by giving written notice within ten (10) Business
Days of receipt of a Third Party Claim, to assume the defense of any Third Party
Claim at the Indemnifying Party’s expense and by the Indemnifying Party’s own
counsel; provided, that such notice contains confirmation that the Indemnifying
Party has agree to indemnify the Indemnified Party (subject to the limitation on
indemnification set forth herein) for the Losses arising out of or resulting
from the Third Party Claim of which it is assuming the right to conduct and
control the defense thereof. In the event that the Indemnifying Party assumes
the defense of any Third Party Claim, subject to Section 8.5(b), it shall have
the right to take such action as it deems necessary to avoid, dispute, defend,
appeal or make counterclaims pertaining to any such Third Party Claim in the
name and on behalf of the Indemnified Party; provided, however, that the
Indemnifying Party shall not be entitled to control, and the Indemnified Party
shall be entitled to have sole control over, the defense or settlement of any
claim if: (i) such claim is part of an Action to which the Indemnifying Party is
also a party and the Indemnified Party is advised by counsel that a conflict
exists as a result of the Indemnifying Party’s control over such proceedings,
(ii) such Third Party Claim seeks injunctive or other equitable relief against
the Indemnified Party, (iii) the Third Party Claim relates to or arises in
connection with any governmental proceeding, action, indictment, allegation or
investigation in respect of the business of Buyer or their respective
Affiliates, (iv) the Indemnifying Party failed or is failing to reasonably
prosecute or defend such Third Party Claim, or (v) such claim involves any
customer, supplier, distributor or other material business relation of Buyer or
its Affiliates. If the Indemnifying Party has validly made such election, the
Indemnified Party shall have the right, at its own cost and expense, to
participate in the defense of any Third Party Claim with counsel selected by it
subject to the Indemnifying Party’s right to control the defense thereof. If the
Indemnifying Party elects not to compromise or defend such Third Party Claim or
fails to promptly notify the Indemnified Party in writing of its election to
defend as provided in this Agreement, the Indemnifying Party shall be liable for
the fees and expenses of counsel employed by the Indemnified Party. The
Indemnified Party and the Indemnifying Party shall cooperate with each other in
all reasonable respects to ensure the proper and adequate defense of any Third
Party Claim, including making available Books and Records and other information
relating to such Third Party Claim and furnishing employees and representatives
as may be reasonably necessary for the preparation of the defense of such Third
Party Claim.

 

(b) Settlement of Third Party Claims.  Notwithstanding any other provision of
this Agreement, if the Indemnifying Party assumes the defense of any Third Party
Claim pursuant to Section 8.5, (i) the Indemnified Party shall not file any
papers or consent to the entry of any judgment or enter into any settlement with
respect to such Third Party Claim and (ii) the Indemnifying Party shall not
consent to the entry of any judgment or enter into any settlement with respect
to such Third Party Claim without the prior written consent of the Indemnified
Party (which consent shall be given if the settlement by its terms (1) obligates
the Indemnifying Party to pay the full amount of the liability in connection
with such Third Party Claim, (2) fully and finally releases the Indemnified
Party completely in connection with such Third Party Claim, and (3) does not
impose any obligation or restriction on such Indemnified Party or its
Affiliates).  If the Indemnifying Party does not assume the defense of such
Third Party Claims or fails to diligently prosecute or withdraws from the
defense of a Third Party Claim, the Indemnifying Party will not be obligated to
indemnify the Indemnified Party for any settlement entered into or any judgment
consented to without the prior the Indemnifying Party’s prior written consent
(which consent shall not be unreasonably withheld, delayed or conditioned).
 Notwithstanding any other provision of this Agreement, whether or not the
Indemnifying Party shall have assumed the defense of a Third Party Claim, if the
Indemnified Party admits any liability with respect to, or settles, compromises
or discharges, such Third Party Claim without the Indemnifying Party’s prior
written consent (which consent shall not be unreasonably withheld, delayed or
conditioned), then such admission, settlement or compromise will not be binding
upon or constitute evidence against the Indemnifying Party for purposes of
determining whether the Indemnified Party has incurred Losses that are
indemnifiable pursuant to this Section 8 or the amount thereof.

 

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(c) Direct Claims.  Any claim by an Indemnified Party on account of a loss which
does not result from or involve a Third Party Claim (a “Direct Claim”) shall be
asserted by the Indemnified Party by providing prompt written notice thereof to
the Indemnifying Party after the Indemnified Party becomes aware of such Direct
Claim. Such notice by the Indemnified Party shall describe the Direct Claim in
reasonable detail and shall indicate the estimated amount, if reasonably
practicable, of the loss that has been or may be sustained by the Indemnified
Party. The Indemnifying Party shall have thirty (30) days after its receipt of
such notice to respond in writing to such Direct Claim asserting or denying its
responsibility with respect to such Direct Claim. During such thirty (30)-day
period, the Indemnified Party shall allow the Indemnifying Party and its
professional advisors to investigate the matter or circumstance alleged to give
rise to the Direct Claim, and whether and to what extent any amount is payable
in respect of the Direct Claim and the Indemnified Party shall reasonably assist
the Indemnifying Party’s investigation. If the Indemnifying Party does not so
respond within such thirty (30)-day period, the Indemnifying Party shall be
deemed to have accepted such claim.

 

(d) Buyer’s Right of Set-Off. Once a loss by a Buyer Indemnified Party is agreed
to by Seller or adjudicated to be payable, Seller shall satisfy its obligations
within 10 business days of such agreement or adjudication (a “Determination”) by
wire transfer of immediately available funds. Subject to the foregoing and any
other limitations contained in this Section 8 , Buyer shall have the right to
set-off the principal amount of the Note then outstanding or any amounts which
may be due or become due under Section 2.1(iii). Notwithstanding the foregoing,
Buyer agrees that prior to seeking redress in the courts for indemnifiable
losses not agreed to by Seller that the matter shall be submitted to mandatory
and expedited mediation by a Florida Court Certified Mediator.

 

Section 8.6 Exclusive Remedies. Subject to Section 10.11, the parties
acknowledge and agree that except for Buyer’s right to assert claims under the
Retention Fund in accordance with the terms and conditions of this Agreement ,
their sole and exclusive remedy with respect to any and all claims for any
breach of any representation, warranty, covenant, agreement or obligation set
forth herein or otherwise relating to the subject matter of this Agreement
(except in the case of fraud) shall be pursuant to the indemnification
provisions set forth in this Section 8.In furtherance of the foregoing, each
party hereby waives, to the fullest extent permitted under Law, any and all
rights, claims and causes of action for any breach of any representation,
warranty, covenant, agreement or obligation set forth herein or otherwise
relating to the subject matter of this Agreement it may have against the other
parties hereto and their Affiliates arising under or based upon any Law, except
pursuant to the indemnification provisions set forth in this Section 8. Nothing
in this Section 8.6 shall limit any Person’s right to seek and obtain any
equitable relief to which any Person shall be entitled pursuant to
Section 10.11.

 

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SECTION 9 TERMINATION

 

Section 9.1 Termination. This Agreement may be terminated at any time prior to
the Closing:

 

(a) by the mutual written consent of Seller and Buyer;

 

(b) by Buyer by written notice to Seller if there has been a material breach,
inaccuracy in or failure to perform any representation, warranty, covenant or
agreement made by Seller pursuant to this Agreement that would give rise to the
failure of any of the conditions specified in Section 3.1, Section 7.1 or
Section 7.2 and such breach, inaccuracy or failure cannot be cured by Seller by
November 30, 2020 (the “Drop Dead Date”);  

 

(c) by Seller by written notice to Buyer if there has been a material breach,
inaccuracy in or failure to perform any representation, warranty, covenant or
agreement made by Buyer pursuant to this Agreement that would give rise to the
failure of any of the conditions specified in Section 7.1 or Section 7.3 and
such breach, inaccuracy or failure cannot be cured by Buyer by the Drop Dead
Date;

 

(d) by Buyer or Seller in the event that:

 

(i) there shall be any Law that makes consummation of the transactions
contemplated by this Agreement illegal or otherwise prohibited;

 

(ii) any Governmental Authority shall have issued a Governmental Order
restraining or enjoining the transactions contemplated by this Agreement, and
such Governmental Order shall have become final and non-appealable; or

 

(iii) the Closing does not occur by the Drop Dead Date.

 

(e) by Buyer or Seller if the Closing has not occurred by the Drop Dead Date;
provided, that the party electing to terminate this Agreement in such instance
has not materially breached this Agreement and such breach is the primary reason
for such failure to consummate the Closing.

 

Section 9.2 Effect of Termination. In the event of the termination of this
Agreement in accordance with this Section 9, this Agreement shall immediately
become null and void and there shall be no liability or obligation on the part
of any party hereto other than liability for any willful breach of this
Agreement prior to such termination; provided that the provisions of Section 6.3
(Confidentiality), this Section 9.2 (Effects of Termination) and Section 10
(Miscellaneous) shall remain in full force and effect and survive any
termination of this Agreement.

 

SECTION 10 MISCELLANEOUS

 

Section 10.1 Expenses.  Except as otherwise expressly provided herein, all costs
and expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses, whether or not the Closing shall have occurred.

 

Section 10.2 Notices. All notices, requests, consents, claims, demands, waivers
and other communications hereunder shall be in writing (including, without
limitation, e-mail transmission) and shall be deemed to have been given (a) if
delivered by hand, when such delivery is made at the address specified on the
signature pages hereto; (b) when received by the addressee if sent by a
nationally recognized overnight courier (receipt requested); (c) if delivered by
e-mail or facsimile, when such e-mail or facsimile is transmitted to the number
or e-mail address specified on the signature page hereto or (d) on the day
mailed, by certified or registered mail, return receipt requested, postage
prepaid. Such communications must be sent to the respective parties at the
addresses or coordinates as provided on the signature pages hereto (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 10.2).

 

25

 

 

Section 10.3 Interpretation. For purposes of this Agreement, (a) the words
“include,” “includes” and “including” shall be deemed to be followed by the
words “without limitation”; (b) the word “or” is not exclusive; and (c) the
words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this
Agreement as a whole. Unless the context otherwise requires, references herein:
(x) Sections, Disclosure Schedules and Exhibits mean the Sections of, and
Disclosure Schedules and Exhibits attached to, this Agreement; (i) to an
agreement, instrument or other document means such agreement, instrument or
other document as amended, supplemented and modified from time to time to the
extent permitted by the provisions thereof and (ii) to a statute means such
statute as amended from time to time and includes any successor legislation
thereto and any regulations promulgated thereunder. This Agreement shall be
construed without regard to any presumption or rule requiring construction or
interpretation against the party drafting an instrument or causing any
instrument to be drafted. The Disclosure Schedules and Exhibits referred to
herein shall be construed with, and as an integral part of, this Agreement to
the same extent as if they were set forth verbatim herein.  All references in
this Agreement or any of the other Transaction Documents to “$” or “Dollars” are
to United States Dollars, unless expressly stated otherwise.

 

Section 10.4 Headings. The headings in this Agreement are for reference only and
shall not affect the interpretation of this Agreement.

 

Section 10.5 Severability. If any term or provision of this Agreement is
invalid, illegal or unenforceable in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other term or provision of
this Agreement or invalidate or render unenforceable such term or provision in
any other jurisdiction.

 

Section 10.6 Entire Agreement. This Agreement (including the Exhibits and the
Disclosure Schedules) and the other Transaction Documents constitute the entire
agreement of the parties with respect to the subject matter contained herein and
therein, and supersede all prior and contemporaneous representations,
warranties, understandings and agreements, both written and oral, with respect
to such subject matter.

 

Section 10.7 Successors and Assigns.  This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns.  Except as set forth in Section 2.6, neither party may
assign its rights or obligations hereunder without the prior written consent of
the other party. No assignment (including pursuant to Section2.6) shall relieve
the assigning party of any of its obligations hereunder.

 

Section 10.8 No Third Party Beneficiaries.  This Agreement is for the sole
benefit of the parties hereto and their respective successors and permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other Person or entity any legal or equitable right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement. The parties agree
that PR is a third-party beneficiary under this Agreement and that in the event
of Buyer’s default under the Credit Agreement dated even date herewith, among
PR, Post Road Administrative LLC,T3 Communications, Inc., a Nevada corporation
(“T3 Nevada”),the subsidiaries of T3 Nevada, including Buyer, and Digerati
Technologies, Inc., PR shall have the right to enforce Buyer’s rights under this
Agreement upon PR’s assumption of Buyer’s obligations under the Transaction
Documents.

 

26

 

 

Section 10.9 Amendment and Modification; Waiver.  This Agreement may only be
amended, modified or supplemented by an agreement in writing signed by Seller
and Buyer. No waiver by any party of any of the provisions hereof shall be
effective unless explicitly set forth in writing and signed by the party so
waiving. No waiver by any party shall operate or be construed as a waiver in
respect of any failure, breach or default not expressly identified by such
written waiver, whether of a similar or different character, and whether
occurring before or after that waiver. No failure to exercise, or delay in
exercising, any right, remedy, power or privilege arising from this Agreement
shall operate or be construed as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.

 

Section 10.10 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.

 

(a) This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Florida without giving effect to any choice or
conflict of law provision, theory, principles or rule (whether of the State of
Florida or any other jurisdiction).

 

(b) ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS
AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY MAY BE INSTITUTED IN THE STATE OR FEDERAL COURTS IN AND FOR
LEE COUNTY, FLOIRDA, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF
PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS SET
FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER
PROCEEDING BROUGHT IN ANY SUCH COURT AND WAIVES ALL DEFENSES OR OBJECTION TO
VENUE OF THE FEDERAL OR STATE COURTS OF LEE COUNTY, FLORIDA OF ANY SUIT, ACTION
OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR
CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER
TRANSACTION DOCUMENTS, THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH
PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION,
(B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 10.10(c).

 

Section 10.11 Specific Performance.  The parties agree that irreparable damage
would occur if any provision of this Agreement were not performed in accordance
with the terms hereof or were otherwise breached. It is accordingly agreed that
the parties to this Agreement shall be entitled to seek equitable relief,
including, without limitation, an injunction or injunctions (without the payment
or posting of any bond) in connection with any breach or threatened breach of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the United States or any state having jurisdiction,
including, without limitation, to enforce the obligations of each of Buyer and
Seller to consummate the Closing. This paragraph shall not be construed as an
election of any remedy, or as a waiver of any right available to the parties
under this Agreement or the law, including, without limitation, the right to
seek damages from the breaching party for a breach of any provision of this
Agreement, nor shall this paragraph be construed to limit the rights or remedies
available under applicable law for any violation of any provision of this
Agreement. The Parties hereby expressly waive all requirements of posting a bond
in any equitable relief sought, injunctive relief or otherwise.

 

27

 

 

Section 10.12 Disclosure Schedule.  The Disclosure Schedules will be arranged to
correspond to the representations and warranties in Section 4 of this Agreement,
and the disclosure in any portion of the Disclosure Schedules shall qualify the
corresponding provision in Section 4 and any other provision of Section 4 to
which it is reasonably apparent from such disclosure that such disclosure
relates.  No reference to or disclosure of any item or other matter in the
Disclosure Schedules shall be construed as an admission or indication that such
item or other matter is material or that such item or other matter is required
to be referred to or disclosed in the Disclosure Schedules.  The information set
forth in the Disclosure Schedules is disclosed solely for the purposes of this
Agreement, and no information set forth therein shall be deemed to be an
admission by any party hereto to any third party of any matter whatsoever,
including of any violation of law or breach of any agreement.

 

Section 10.13 Counterparts. This Agreement may be executed and delivered
(including, without limitation, by facsimile transmission or e-mail) in
counterparts, each of which shall be deemed an original, but all of which
together shall be deemed to be one and the same agreement. A signed copy of this
Agreement delivered by facsimile, e-mail or other means of electronic
transmission shall be deemed to have the same legal effect as delivery of an
original signed copy of this Agreement.

 

Section 10.14 Non-recourse.  This Agreement and the Transaction Documents may
only be enforced against, and any Action or other legal proceeding based upon,
arising out of, or related to this Agreement and the Transaction Documents, or
the negotiation, execution or performance of this Agreement and the Transaction
Documents, may only be brought against the entities that are expressly named as
a party hereto and thereto and then only with respect to the specific
obligations set forth herein and therein with respect to such party. No past,
present or future director, officer, employee, incorporator, manager, member,
partner, stockholder, Affiliate, agent, attorney or other Representative of any
party hereto or of any Affiliate of any party hereto and thereto, or any of
their successors or permitted assigns, shall have any liability for any
obligations or liabilities of any party hereto under this Agreement and the
Transaction Documents or for any Action or other legal proceeding based on, in
respect of or by reason of the transactions contemplated hereby and thereby;
provided, however, nothing in this Section 10.14 shall relieve or otherwise
limit the liability of any party hereto or thereto or any of their respective
successors or permitted assigns for any breach or violation of its obligations
under such agreements, documents or instruments.

 

SECTION11 DEFINITIONS

 

The following terms have the meanings specified or referred to in this
Section11:

 

“Action” means any action, appeal, petition, plea, charge, complaint, claim,
suit, demand, litigation, grievance, arbitration, mediation, hearing, inquiry,
investigation or similar event, occurrence, or proceeding, including, without
limitation, proceedings by or before any Governmental Authority, arbitrator or
mediator.

 

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person. For the purposes of this definition,
the term “control” (including the terms “controlling”, “controlled by” and
“under common control with”) means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by Contract or
otherwise.

 

28

 

 

“Agent and Partner Agreements” means-Salesperson and Independent Sales Office(s)
Agreements.

 

“Agreement” has the meaning set forth in the preamble.

 

“Assigned Contracts” means all Contracts constituting Purchased Assets as
identified in the Disclosure Schedules.

 

“Assignment and Assumption Agreement” has the meaning set forth in Section
3.3(a)(ii).

 

“Bill of Sale” has the meaning set forth in Section 3.3(a)(i).

 

“Business” has the meaning set forth in the recitals and specifically includes
the provision of telecommunications services by Seller that includes the bundled
offing of Unified Communications as a Service (UCaaS), cloud/hosted PBX, call
recording, SMS text messaging,  video conferencing, cloud collaboration, 4g/5g
mobile data, SD-WAN, SIP trunking, and VoIP services but specifically excludes
Seller’s hosting and managed service offerings and associated assets.

 

“Business Day” means any day except Saturday, Sunday or any other day on which
commercial banks located in New York, New York are authorized or required by Law
to be closed for business.

 

“Business Registered Domain Names” has the meaning set forth in Section 4.1.

 

“Business Registered IP” has the meaning set forth in Section 4.10(a).

 

“Business Registered Marks” has the meaning set forth in Section 4.10.1.

 

“Buyer” has the meaning set forth in the preamble.

 

“Buyer Fundamental Representations” has the meaning set forth in Section 8.1.

 

“Buyer Indemnified Parties” has the meaning set forth in Section 8.2.

 

“Buyer Special Indemnification Matters” has the meaning set forth in Section
8.4(a).

 

“Claim Notice” has the meaning set forth in Section 8.5(a).

 

“Closing” has the meaning set forth in Section 3.1.

 

“Closing Date” has the meaning set forth in Section 3.1.

 

“Communication Laws” has the meaning set forth in Section 3.2 (b).

 

“Confidentiality Agreement” has the meaning set forth in Section 6.3.

 

“Contracts” means all legally binding contracts (oral or written), leases,
mortgages, licenses, sublicenses, instruments, notes, commitments, undertakings,
indentures, letters of intent, memorandum of understanding, memorandum of
agreement and other agreements including purchase orders.

 

29

 

 

“Customer Base” has the meaning set forth in Section 1.1.

 

“De-Minimis Losses” has the meaning set forth in Section 8.4(b).

 

“Disclosure Schedules” means the Disclosure Schedules delivered by Seller
concurrently with the execution and delivery of this Agreement.

 

“Drop-Dead Date” has the meaning set forth in Section 9.1(b).

 

“Encumbrance” means any lien, pledge, mortgage, deed of trust, security
interest, charge, claim, easement, encroachment, encumbrance or other
restriction.

 

“Excluded Assets” has the meaning set forth in Section 1.2.

 

“Expiration Date” has the meaning set forth in Section 8.1.

 

“FCC Consent” has the meaning set forth in Section 3.2.

 

“FCC Permit” has the meaning set forth in Section 3.2 (a).

 

“Financial Statements” has the meaning set forth in Section 4.4.1.

 

“GAAP” means United States generally accepted accounting principles in effect
from time to time.

 

“Governmental Authority” means any United States or non-United States national,
federal, state, local, provincial or international government or political
subdivision thereof, or any agency or instrumentality of such government or
political subdivision, or any stock exchange or self-regulated organization or
other non-governmental regulatory authority or quasi-governmental authority (to
the extent that the rules, regulations or orders of such organization or
authority have the force of Law), or any arbitrator, court or tribunal of
competent jurisdiction.

 

“Governmental Order” means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.

 

“Indemnification Cap” has the meaning set forth in Section 8.4(a).

 

“Indemnified Party” has the meaning set forth in Section 8.5.

 

“Indemnifying Party” has the meaning set forth in Section 8.5.

 

“Intellectual Property” means any and all intellectual property rights, of the
“Business” in the world arising under the Laws of any jurisdiction with respect
to, arising from or associated with the following: (a) all Internet addresses
and domain names (“Domain Names”); (b) trade names, trademarks and service marks
(registered and unregistered), trade dress, industrial designs, brand names,
trade dress rights, logos, emblems, signs or insignia, social media handles and
names, and similar rights and applications to register any of the foregoing, and
all goodwill associated therewith throughout the world (collectively, “Marks”);
(c) patents, patent applications (including any provisional or non-provisional
patent applications,divisionals, continuations, continuations-in-part, renewals,
reexaminations, extensions, and reissues), rights therein provided by
international treaties or conventions and rights in respect of utility models or
industrial designs (collectively, “Patents”); (d) copyrights and works of
authorship (including copyrights in software programs) and registrations and
applications therefor and all other rights corresponding thereto, moral rights,
database and design rights, and mask works and registrations and applications
therefor (collectively, “Copyrights”); (e) know-how, discoveries, trade secrets,
methods, processes, technical data, specifications, research and development
information, technology, data bases and other proprietary or confidential
information, including customer lists, in each case that derives economic value
from not being generally known to other Persons who can obtain economic value
from its disclosure, but excluding any Copyrights or Patents that cover or
protect any of the foregoing (collectively, “Trade Secrets”); and (f) all other
intellectual property and industrial property rights and assets, and all rights,
interests and protections that are associated with, similar to, or required for
the exercise of, any of the foregoing.

 

30

 

 

“Intellectual Property Assets” means all Intellectual Property that is owned or
controlled by Seller and used or held for use in the operation of the Business
including any and all Intellectual Property related to “ActivePBX”. 

 

“Knowledge of Seller” or any other similar knowledge qualification, means the
actual knowledge, after reasonable investigation, of those persons listed on
Section 1.01(d) of the Disclosure Schedules and that knowledge which such
Persons would have acquired after using commercially reasonable and customary
efforts to make a due inquiry into the underlying subject.

 

“Law” means any domestic or foreign statute, law, ordinance, regulation, rule,
code, order, injunction, constitution, treaty, common law, judgment, decree,
other requirement or rule of law of any Governmental Authority and generally
accepted industry standards.

 

“Liability” means any Indebtedness, obligation, or liability, including any
interest, penalties, fees, costs and expenses, whether known or unknown, matured
or unmatured, accrued or unaccrued, vested or unvested, asserted or unasserted,
actual or contingent.

 

“Material Adverse Effect” means any event, occurrence, fact, condition, change,
circumstance, effect, development or state of facts that has had, or would
reasonably be expected to have, a material adverse effect on (a) the business,
results of operations, condition (financial or otherwise), assets or liabilities
of the Business, taken as a whole, or (b) the ability of Seller to perform its
obligations under this Agreement or the Transaction Documents or consummate the
transactions contemplated hereby or thereby; provided, however, that ” Material
Adverse Effect ” shall not include any event, occurrence, fact, condition or
change, directly or indirectly, arising out of or attributable to: (i) general
economic or political conditions; (ii) conditions generally affecting the
industry in which the Business operates; (iii) any changes in financial, banking
or securities markets in general, including any disruption thereof and any
decline in the price of any security or any market index or any change in
prevailing interest rates; (iv) acts of war (whether or not declared), armed
hostilities or terrorism, or the escalation or worsening thereof; (v) any action
required by this Agreement or any action taken with the written consent of or at
the written request of Buyer; (vi) any matter that is set forth in the
Disclosure Schedules to the extent it is reasonably apparent from the face of
such disclosure that it could have a Material Adverse Effect; (vii) any changes
in applicable Laws or accounting rules (including GAAP) or the enforcement,
implementation or interpretation thereof; (viii) the announcement or completion
of the transactions contemplated by this Agreement, including losses or
threatened losses of employees, customers, suppliers, distributors or others
having relationships with the Seller and the Business; (ix) any natural or
man-made disaster or acts of God; or (x) any failure by the Business to meet any
internal or published projections, forecasts or revenue or earnings predictions
(provided, however, that, with respect to this clause (x) the underlying causes
of such failures (subject to the other provisions of this definition) shall not
be excluded); and, provided, however, that the exclusions under clauses (i),
(ii), (iii), (iv) and (vii) and (ix) shall not apply to the extent that such
event, occurrence, fact, condition or change disproportionately affects the
Seller with respect to the Business (taken as a whole) as compared to other
businesses or participants in the industry in which the Business operates.

 

31

 

 

“Material Contract” has the meaning set forth in Section 4.6.

 

“Material Customer” has the meaning set forth in Section 4.17.1.

 

“Material Supplier” has the meaning set forth in Section 4.17.2.

 

“MRC” means the Monthly Reoccurring Charge of base Business service provided by
the Seller (pre- Closing) or Buyer (post-Closing) under monthly contracts or
subscriptions of the Customer Base, excluding charges for taxes, regulatory
fees, additional set-up fees, equipment purchases or lease, and consulting fees

 

“Permits” means all federal, state, local and foreign permits, licenses,
franchises, approvals, waivers, certificates, certifications, authorizations and
consents required to be obtained from Governmental Authorities.

 

“Permitted Encumbrances” means (a) statutory liens for Taxes not yet due and
payable or being contested in good faith by appropriate procedures;
(b) mechanics’, carriers’, workmen’s, repairmen’s or other like liens arising or
incurred in the ordinary course of business; (c) easements, rights of way,
zoning ordinances and other similar encumbrances affecting Leased Real Property
that do not interfere with the use of such assets or properties as currently
used; and (d) liens arising under original purchase price conditional sales
contracts and equipment leases with third parties entered into in the ordinary
course of business, in each case as related to the Business or the Purchase
Assets.

 

“Person” means an individual, corporation, partnership, joint venture, limited
liability company, Governmental Authority, unincorporated organization, trust,
association or other entity.

 

“Purchase Price” has the meaning set forth in Section 2.

 

“Purchased Assets” has the meaning set forth in Section 1.1.

 

“Receivables” means all receivables arising from or related to the Business and
which are set forth in Section 1.1.2 of the Disclosure Schedules. An updated
Schedule 1.1.2 of the Disclosure Schedules shall be delivered by Seller to Buyer
on and as of the Closing Date. Such updated Schedule1.1.2 of the Disclosure
Schedules shall be incorporated into the Disclosure Schedules as if delivered as
of the date hereof.

 

“Seller” has the meaning set forth in the preamble.

 

“Seller Indemnified Party(ies)” has the meaning set forth in Section 8.3.

 

“Seller IP Representations” has the meaning set forth in Section 8.1.

 

“Seller Special Indemnification Matters” has the meaning set forth in Section
8.4(a).

 

““Subsidiary” or “Subsidiaries” means, with respect to any Person, any other
Person of which an amount of the voting securities, other voting ownership or
voting partnership interests of which is sufficient to elect at least a majority
of its board of directors or other governing body (or, if there are no such
voting interests, 50% or more of the Equity Interests of which) is owned
directly or indirectly by such first Person.  For the purposes hereof, the term
Subsidiary shall include all Subsidiaries of such Subsidiary.

“Survival Period” has the meaning set forth in Section8.1.

 

32

 

 

“Tangible Personal Property” means all furniture, fixtures, equipment, supplies
and other tangible personal property of the Business.

 

“Taxes” means (i) all federal, state, local or foreign taxes, including all
income, gross receipts, capital, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation,
property and estimated taxes, customs duties, fees, assessments and charges in
the nature of a tax, (ii) all interest, penalties, fines, additions to tax or
additional amounts imposed by any Governmental Authority in connection with any
item described in clause (i), and (iii) any liability in respect of any items
described in clauses (i) or (ii) payable by reason of Contract, assumption,
transferee liability, operation of Law, or Treasury Regulation
Section 1.1502-6(a) (or any predecessor or successor thereof or any analogous or
similar provision under Law).

 

“Tax Return” means any return, report or statement filed or required to be filed
with a Governmental Authority with respect to any Taxes (including any
elections, declarations, schedules or attachments thereto, and any amendment
thereof) including any information return, claim for refund, amended return or
declaration of estimated Taxes.

 

“Third Party Claim” has the meaning set forth in Section8.5(a).

 

“Threshold” has the meaning set forth in Section 8.4(b).

 

“Trademark Assignment Agreement” has the meaning set forth in Section 3.3(vi).

 

“Transaction Documents” means this Agreement, the Bill of Sale, the Consulting
Agreements, the Non-Compete Agreement, the Assignment and Assumption Agreement,
the Master Services Agreement, the Note, the Subordination Agreement, the
Trademark Assignment Agreement and the other agreements, instruments and
documents required to be delivered at the Closing.

 

33

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above by their respective officers thereunto duly
authorized.

 

  ACTIVESERVE, INC.          By /s/ Alex Gonzalez   Name: Alex Gonzalez   Title:
CEO                         Address:   Email:   Phone:         With a Copy to:
Maldonado Law Group   Address:2850 Douglas Road, Suite 303   Coral Gables, FL
33134   Email: eam@maldonado-group.com

 

  T3 COMMUNICATIONS, INC.       By /s/ Arthur L. Smith   Name: Arthur L. Smith  
Title: CEO       Address: 825 W. Bitters, Suite 104   San Antonio, TX 78216  
Email:   Phone:       With a Copy to: Lucosky Brookman LLP   Address: 101 Wood
Avenue South   Woodbridge, NJ 08830   Email: sbrookman@lucbro.com

 

[Signature Page to Asset Purchase Agreement]

 

34

 

 

EXHIBIT A LIST OF ADDITIONAL ASSETS

 

 

 

 

 

 

 

Exhibit B

 

Renewable Customer Contracts

 

 

 

 

EXHIBIT C

 

Form of Consulting Agreement

 

 

 

 

EXHIBIT D

 

Non-Compete Agreement

 

 

 

 

EXHIBIT E

 

Bill of Sale

 

 

 

 

EXHIBIT F

 

Assignment and Assumption Agreement

 

 

 

 

EXHIBIT G

 

Trademark Assignment Agreement

 

 

 

 

EXHIBIT H

 

FCC Authorization and Public Notice of Approval

 

 

 

 

EXHIBIT I

 

Promissory Note

 

 

 

 

EXHIBIT J

 

Subordination Agreement

 

 

 

 

EXHIBIT K

 

Master Services Agreement

 

 

 

 

Disclosure Schedules

 

Schedule 1.1.2 Seller Accounts Receivable.

 

 

 

 

Schedule 1.1.8 Seller Agent and Partner Agreements.

 

 

 

 

 

 

 

Schedule 1.1.9 Seller Key Supplier Agreements.

 

 

 

 

 

 

 

Schedule 1.1.10 License Agreements with Net Sapiens.

 

 

 

 

 

 

 

Schedule 1.1.11 License Agreements with Sansay.

 

 

 

 

 

 

 

Schedule 1.1.12 IP Phone Handset Certifications and Licenses.

 

 

 

 

 

 

 

Schedule 1.1.13 Seller Software Licenses.

 

 

 

 

 

 

 

Schedule 1.1.15 All other Assets of Seller.

 

 

 

 

 

 

 

Schedule 4.3 No Conflicts, Litigation and Non-Contravention

 

 

 

 

 

 

 

Schedule 4.5 Absence of Changes.

 

 

 

 

 

 

 

Schedule 4.6 Material Contracts

 

 

 

 

 

 

 

Schedule 4.7 Title to Tangible Property

 

 

 

 

 

 

 

Schedule 4.10.1 Intellectual Property

 

 

 

 

 

 

 

Schedule 4.12.2 Permits.

 

 

 

 

 

 

 

Schedule 4.16.1 Customers.

 

 

 

 

 

 

 

Schedule 4.16.2 Suppliers (VoIP Carriers and other communication service
providers).

 

 

 

 

 

 

 

Schedule 4.17 Bona Fide Receivables.