EX-10.19  AGREEMENT AND PURCHASE & SALE OF ASSETS



 






Exhibit 10.19




AGREEMENT




For




PURCHASE AND SALE




of




ASSETS




Dated as of October __, 2006




Between




TRINSIC COMMUNICATIONS, INC.




And




COMMX HOLDINGS, INC.




-i-




 









 





TABLE OF CONTENTS



Page




	 	 	 	 	 
	ARTICLE 1 PURCHASE AND SALE OF ASSETS
	 	 	1	 
	 
	 	 	 	 
	1.1. Purchase and Sale of Transferred Assets
	 	 	1	 
	 
	 	 	 	 
	1.2. Assumption of Obligations by Buyer
	 	 	1	 
	 
	 	 	 	 
	1.3. Purchase Price
	 	 	2	 
	 
	 	 	 	 
	1.4. Prorations
	 	 	3	 
	 
	 	 	 	 
	1.5. Allocation of the Purchase Price for Tax Purposes
	 	 	4	 
	 
	 	 	 	 
	1.6. Transfer Taxes
	 	 	4	 
	 
	 	 	 	 
	ARTICLE 2 ACCESS
	 	 	4	 
	 
	 	 	 	 
	2.1. Access to Books and Records
	 	 	4	 
	 
	 	 	 	 
	2.2. Access to Customer Data
	 	 	4	 
	 
	 	 	 	 
	ARTICLE 3 TRANSFERS
	 	 	5	 
	 
	 	 	 	 
	3.1. Transfers
	 	 	5	 
	 
	 	 	 	 
	3.2. Deliveries by Seller to Buyer
	 	 	5	 
	 
	 	 	 	 
	3.3. Deliveries by Buyer to Seller
	 	 	5	 
	 
	 	 	 	 
	3.4. Further Assurances
	 	 	6	 
	 
	 	 	 	 
	ARTICLE 4 CONDITIONS
	 	 	6	 
	 
	 	 	 	 
	4.1. Conditions to Buyer’s Obligations
	 	 	6	 
	 
	 	 	 	 
	4.2. Conditions to Seller’s Obligations
	 	 	7	 
	 
	 	 	 	 
	ARTICLE 5 REPRESENTATIONS AND WARRANTIES
	 	 	8	 
	 
	 	 	 	 
	5.1. Buyer’s Representations and Warranties
	 	 	8	 
	 
	 	 	 	 
	5.2. Seller’s Representations and Warranties
	 	 	9	 
	 
	 	 	 	 
	ARTICLE 6 COVENANTS
	 	 	10	 
	 
	 	 	 	 
	6.1. Covenants of Seller
	 	 	10	 
	 
	 	 	 	 
	6.2. Confidentiality and other Post Transfer Restrictions on Seller
	 	 	10	 
	 
	 	 	 	 
	6.3. Confidentiality and other Post-Transfer Restrictions on Buyer
	 	 	10	 
	 
	 	 	 	 
	6.4. Mutual Covenants
	 	 	11	 
	 
	 	 	 	 
	ARTICLE 7 TERMINATION
	 	 	12	 
	 
	 	 	 	 
	7.1. Termination By Buyer
	 	 	12	 






 









 







	 	 	 	 	 
	7.2. Termination By Seller
	 	 	12	 
	 
	 	 	 	 
	7.3. Termination By Buyer or Seller
	 	 	12	 
	 
	 	 	 	 
	7.4. Effect of Termination
	 	 	12	 
	 
	 	 	 	 
	ARTICLE 8 ADDITIONAL MATTERS
	 	 	13	 
	 
	 	 	 	 
	8.1. Pre-Transfer
	 	 	13	 
	 
	 	 	 	 
	8.2. Customer Records
	 	 	13	 
	 
	 	 	 	 
	8.3. Carrier Access Billing
	 	 	13	 
	 
	 	 	 	 
	8.4. New Customer Service Orders and Service Change Orders
	 	 	14	 
	 
	 	 	 	 
	8.5. Access to Books and Records
	 	 	14	 
	 
	 	 	 	 
	8.6. Bulk Sales Laws
	 	 	14	 
	 
	 	 	 	 
	8.7 Post Transfer Support
	 	 	14	 
	 
	 	 	 	 
	ARTICLE 9 SURVIVAL AND INDEMNIFICATION
	 	 	15	 
	 
	 	 	 	 
	9.1. Survival
	 	 	15	 
	 
	 	 	 	 
	9.2. Indemnification and Payment of Damages by Seller
	 	 	15	 
	 
	 	 	 	 
	9.3. Indemnification and Payment of Damages by Buyer
	 	 	15	 
	 
	 	 	 	 
	9.4. Procedure for Indemnification – Third Party Claims
	 	 	15	 
	 
	 	 	 	 
	9.5. Procedure for Indemnification – Other Claim
	 	 	16	 
	 
	 	 	 	 
	9.6. Limitations on Seller’s Indemnification of Purchaser
	 	 	16	 
	 
	 	 	 	 
	9.7. Limitations on Buyer’s Indemnification of Seller
	 	 	16	 
	 
	 	 	 	 
	ARTICLE 10 WAIVER OF TRIAL BY JURY
	 	 	17	 
	 
	 	 	 	 
	10.1. Waiver of Trial by Jury
	 	 	17	 
	 
	 	 	 	 
	10.2. Dispute Resolution
	 	 	17	 
	 
	 	 	 	 
	ARTICLE 11 CERTAIN DEFINITIONS
	 	 	17	 
	 
	 	 	 	 
	11.1. Defined Terms
	 	 	17	 
	 
	 	 	 	 
	11.2. Interpretation
	 	 	22	 
	 
	 	 	 	 
	ARTICLE 12 GENERAL
	 	 	22	 
	 
	 	 	 	 
	12
	 	 	 	 
	 
	 	 	 	 
	12.1. Notices
	 	 	22	 
	 
	 	 	 	 
	12.2. Waivers
	 	 	23	 
	 
	 	 	 	 
	12.3. Payment of Expenses
	 	 	23	 
	 
	 	 	 	 
	12.4. Headings
	 	 	23	 
	 
	 	 	 	 
	12.5. Counterparts; Facsimile
	 	 	23	 






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	12.6. Successors and Assigns
	 	 	23	 
	 
	 	 	 	 
	12.7. Assignment
	 	 	24	 
	 
	 	 	 	 
	12.8. Additional Instruments and Assistance
	 	 	24	 
	 
	 	 	 	 
	12.9. Governing Law
	 	 	24	 
	 
	 	 	 	 
	12.10. Severability
	 	 	24	 
	 
	 	 	 	 
	12.11. Amendments
	 	 	24	 
	 
	 	 	 	 
	12.12. No Construction Against the Drafting Party
	 	 	24	 
	 
	 	 	 	 
	12.13. Entire Agreement; No Third Party Beneficiaries
	 	 	25	 







3









 








AGREEMENT FOR PURCHASE AND SALE OF ASSETS




     This Agreement for Purchase and Sale of Customer Access Lines (this “Agreement”) is made and
entered into this ___ day of October 2006, between Trinsic Communications, Inc., a Delaware
corporation (“Seller”), and CommX Holdings, Inc., a Florida corporation (“Buyer”).



RECITALS




     A. Seller is a competitive local exchange carrier. Seller has a line of business whereby it
utilizes a voice over Internet protocol (“VoIP”)-based network to provide voice and data services
to end users (the “Business”). The network includes aggregation devices placed on the customers’
premises called integrated access devices or “IADs” and pure packet nodes or “PPNs.” IADs are
installed on the premises of multi-line business customers. PPN’s are installed on the premises of
multi-unit dwellings where many single-line customers reside. Internally at Seller the VoIP
network is referred to as NGN or “next generation network. The Business operates in three
distinct locations: New York, Tampa and Parkcrest. Parkcrest is a condominium complex on Harbour
Island in Tampa. Although Parkcrest is within Tampa, for the purposes of this Agreement, the
Customers residing at Parkcrest are not a subset of and are separate and distinct from the Tampa
Customers.



     B. Buyer is a provider of voice application services over the internet.



     C. Seller desires to sell, convey, assign, transfer and deliver to Buyer, and Buyer desires to
buy, assume and accept from Seller, substantially all of Seller’s rights and obligations to operate
the Business, all as set forth hereinafter.



     NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this
Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Seller and Buyer agree as follows:



ARTICLE 1

PURCHASE AND SALE OF ASSETS




     1.1. Purchase and Sale of Transferred Assets. Upon the terms and subject to the
conditions hereinafter set forth, at the Transfers described in Article 3, Seller agrees to sell,
convey, transfer and assign to Buyer the “Transferred Assets,” and Buyer agrees to purchase and
receive such Transferred Assets from Seller. Moreover, Seller agrees to pay the Purchase Price (as
defined in Section 1.3 below) as set forth in Section 1.3. Seller shall retain the Excluded
Assets, including but not limited to all other lines of business and the service to customers of
such lines of business.



     1.2. Assumption of Obligations by Buyer. Buyer covenants and agrees that Buyer will
assume and agree to perform and discharge the Assumed Liabilities as and when due. Except for the
Assumed Liabilities, the parties agree that Buyer will not assume any other liability or obligation
of Seller, including any liability relating to the Excluded Assets. All such liabilities not
assumed by the Buyer pursuant to this Section 1.2 shall be retained by Seller and shall hereafter
be referred to as the “Retained Liabilities.”



 









 





     1.3. Purchase Price. The aggregate purchase price for the Transferred Assets is
$1,145,329 (the “Purchase Price”), allocated as set forth below, plus the assumption by Buyer of
the Assumed Liabilities.



	 	 	 	 	 
	             Transferred Asset	 	Amount	 
	Tampa Customer Contracts
	 	$	418,000	 
	New York Customer Contracts
	 	 	255,750	 
	Park Crest Customer Contracts
	 	 	27,500	 
	Equipment and other Assets
	 	 	444,079	 
	 
	 	 	 
	 
	 	 	 	 
	Total
	 	$	1,145,329	 
	 
	 	 	 




The Purchase Price shall be payable as set forth on Exhibit B, attached hereto and incorporated
herein. On each Payment Date, Buyer shall pay by check in good, immediately available funds for
guaranteed overnight delivery to Seller on the next business day, at Sellers address for notices
provided in Section 12.1, the sum set forth on Exhibit B (each a “Transaction Payment”).. Time is
an essential element of Buyer’s obligations under this Section 1.3. The Purchase Price and
Transaction Payments indicated on Exhibit B represent payment solely for the Transferred Assets and
are not inclusive of charges between Seller and Buyer for adjunct services provided in association
with Section 8.7 below and the Statement of Work referred to therein and attached hereto as Exhibit
A and incorporated herein.



If Buyer fails or refuses to make all or any portion of any Transaction Payment in accordance with
the procedure in the preceding paragraph Seller may prepare, and Buyer will sign and deliver to
Seller, a security agreement granting to Seller a security interest in the Transferred Assets not
paid for and file any appropriate Uniform Commercial Code forms it deems necessary or advisable in
order to secure payment of such unpaid Transferred Assets.




          1.3.1 Purchase Price Adjustment. The Purchase Price established in Section 1.3 above
is based upon estimated Customer counts. For Section 1.3, the number of Customers was estimated as
follows:




	 	 	 	 	 
	Tampa
	 	152 Customers
	 
	New York
	 	93 Customers
	 
	Parkcrest
	 	55 Customers





If on the day before end user notifications of service provider change are mailed to the Customers
in a given location the number of Customers in that location is less than 95% of the foregoing
estimated level for that location, then there will be a Purchase Price adjustment. The Purchase
Price adjustment will be calculated by multiplying the deficient number of Tampa or New York
Customers by $2,750 and Parkcrest Customers by $500. The Purchase Price adjustment will be divided
by the number of remaining Payment Dates to calculate a per Transaction Payment reduction to be
applied to the remaining Transaction Payments under




2









 







Exhibit B. There will be no Purchase Price adjustment for actual levels that exceed the estimated
levels.




          1.3.2. Service Penalty. If through no material fault of Seller, Buyer does not
complete the Transition of all Customers from any reliance upon Seller’s physical network
architecture by midnight, March 31, 2007, then Buyer will owe and pay the following support service
penalties for each subsequent date where Seller is provides network services because Transition has
not been completed:




	 	 	 	 	 
	April 1, 2007
	 	$	10,000	 
	 
	April 14, 2007
	 	$	50,000	 
	 
	April 28, 2007
	 	$	100,000	 
	 
	May 28, 2007
	 	$	100,000	 
	 
	28th of Any Subsequent Month
	 	$	100,000	 






     Such payments will be due within 5 days after the penalty is incurred.



     1.4. Prorations. All taxes imposed on a periodic basis (including personal property
taxes, ad valorem taxes, franchise fees or taxes and similar taxes and assessments with respect to
the Transferred Assets), shall be prorated between Buyer and Seller as of 11:59 p.m., Eastern Time,
on the applicable Transfer Date. With respect to measurement periods that include (but do not end
on) the applicable Transfer Date (all such periods of time being hereinafter called “Proration
Periods”), Seller shall be responsible for the portion of any such liabilities that relates to the
portion of such Proration Period ending on the such Transfer Date, which shall be deemed to be the
amount of such liability for the entire Proration Period multiplied by a fraction, the numerator of
which is the number of days in the portion of the Proration Period ending on the Transfer Date, and
the denominator of which is the number of days in the Proration Period. Buyer shall be responsible
for the portion of any such liabilities that relates to the portion of such Proration Period
beginning after the Transfer Date, which shall be deemed to be the amount of such liability for the
entire Proration Period multiplied by a fraction, the numerator of which is the number of days in
the portion of the Proration Period beginning on the day following the Transfer Date, and the
denominator of which is the number of days in the Proration Period. On the Transfer Date, Buyer
shall reimburse Seller, on this prorated basis, for Buyer’s portion of any such Proration Period
liabilities that have been paid before the Transfer Date. Seller shall reimburse Buyer, on this
prorated basis, for Seller’s portion of any such Proration Period liabilities paid on or after the
Transfer Date within five (5) business days of Seller’s receipt of an invoice (including reasonable
support for the calculation of the invoiced amount) from Buyer for such liabilities, but no earlier
than five (5) days prior to the due date for the payment of any such liability. To the extent that
Buyer or Seller has not reimbursed the other party for such a Proration Period liability for which
Buyer or Seller is responsible by the due date for such reimbursement, the amount of such
reimbursement payment shall bear simple interest at the rate of 8% per annum beginning on the due
date for payment of each such liability.



3









 





     1.5. Allocation of the Purchase Price for Tax Purposes. Seller may, in its
discretion, make an allocation (the “Allocation”) of the Purchase Price, the Assumed Liabilities
and other relevant items to the individual assets or classes of assets comprising the Transferred
Assets in accordance with Section 1060 of the United States Internal Revenue Code of 1986, as
amended (the “Code”). Buyer agrees not knowingly to make any filing or take any position with any
Governmental Authority that is inconsistent with the Allocation.



     1.6. Transfer Taxes. Buyer shall bear and be responsible for any Transfer Taxes
imposed by any Governmental Authorities in connection with the sale, transfer or assignment of the
Transferred Assets or otherwise on account of the Transactions, regardless of whether Buyer or
Seller is assessed therefor. Buyer shall pay such Transfer taxes directly to the taxing authorities
or, if requested by Seller, shall remit to Seller on the Transfer Date amounts sufficient to enable
Seller to pay any Transfer Taxes assessed against Seller. If Buyer pays any Transfer Taxes
directly, Buyer shall provide to Seller within ten (10) days of each such payment written evidence
of receipt of such payment by the appropriate taxing authority.



ARTICLE 2




ACCESS




     2.1. Access to Books and Records. Upon execution of this Agreement, Seller, upon
reasonable notice from Buyer, shall permit Buyer and its authorized representatives reasonable
access during customary business hours at Seller’s place of business to the books and records,
contracts, permits and other relevant data, information and things pertaining to the Transferred
Assets. Seller agrees to update and keep current all such information for the period prior to the
Transfer of the Transferred Assets.



     2.2. Access to Customer Data. Upon execution of this Agreement, Seller shall provide
Buyer with all customer information and data relating to the Transferred Assets as reasonably
requested by Buyer that pertains to the Transferred Assets. Upon the request of Buyer, Seller
shall provide Buyer with a complete computer download of all customer service records for Customers
(including the feature sets, pricing and packages sold to the customer).



ARTICLE 3




TRANSFERS




     3.1. Transfers. Upon the terms and subject to the conditions of this Agreement, the
transfer of ownership of the Transferred Assets and the assumption of the Assumed Liabilities (a
“Transfer”) shall take place as outlined in Exhibit B at such location and time as the parties may
mutually determine within the following framework, except with respect to Customer Contracts the
Transfers shall take place according to the event dates identified in Exhibit B, or, if later,
within three (3) days following the satisfaction or waiver of all the conditions precedent to such
Transfer, including, but not limited to (i) the conditions precedent set forth in Article 4 hereof,
(ii) the receipt of all necessary Governmental Approvals. For each Transfer the date on which the
Transfer actually occurs is referred to as the “Transfer Date,” or collectively as “Transfer
Dates.” The parties may consummate a Transfer by exchanging documents via e-mail, facsimile



4









 




and overnight courier in a mutually acceptable manner. A Transfer shall be deemed to have occurred
as of 11:59 p.m., Eastern Time, on the Transfer Date. Unless Buyer makes other arrangements
acceptable to Seller, Seller will deliver Transferred Assets consisting of equipment to Buyer’s
premises within the continental United States as directed by Buyer. Seller and Buyer will split the
costs of delivery and insurance against loss in transit on a 50/50 basis.




     3.2. Deliveries by Seller to Buyer. At or prior to each Transfer, Seller will deliver
to Buyer:



          3.2.1. Certificate. A duly executed certificate of Seller signed by the appropriate
officer of Seller certifying as to the fulfillment of the conditions set forth in Sections 4.1.1
and 4.1.2 of this Agreement;




          3.2.2. List of Customer Contracts. If applicable to the Transaction, Seller will
provide to Buyer an updated complete list of the Customer Contracts to be Transferred (a copy of
such list as of the date of this Agreement is attached hereto as Exhibit C.




          3.2.3. Bill of Sale. A Bill of Sale of the Transferred Assets in form and substance
reasonably satisfactory to Buyer.




          3.2.4. Assignments and Consents. If applicable to the Transaction, all reasonable and
necessary consents of third parties necessary to convey the Transferred Assets.




     3.3 Deliveries by Buyer to Seller. At or before each Transfer, Buyer will deliver to
Seller a duly executed certificate of Buyer signed by the appropriate Officer of Buyer certifying
as to the fulfillment of the conditions set forth in Section 4.2.1 and 4.2.2 of this Agreement.



     3.4. Further Assurances. Except as otherwise agreed by the parties, all instruments
of conveyance, assignment or transfer referred to herein, and all records and data to be delivered
as specified in this Agreement shall be delivered at the time of the applicable Transfer. The
parties agree at any time to execute and deliver such further instruments of conveyance, assignment
(including Uniform Commercial Code Forms) and assumption as may be reasonably necessary to
consummate the Transfers and to give effect to the transfer of the Transferred Assets including any
security interest in Transferred Assets not paid for in accordance with Section 1.3, and the
assumption of the Assumed Liabilities.



ARTICLE 4




CONDITIONS




     4.1. Conditions to Buyer’s Obligations. The obligation of Buyer to consummate a
Transfer shall be subject to the satisfaction, on or prior to each Transfer Date, of each of the
following conditions, any of which may be waived by Buyer in writing:



5









 





          4.1.1. Representations and Warranties. All representations and warranties of Seller
made in this Agreement shall be true and correct in all material respects as of the Transfer Date,
except for such representations and warranties that are made expressly as of an earlier date which
shall be true and correct as of date made.




          4.1.2. Covenants and Agreements. Seller shall have performed and complied in all
material respects with all covenants and agreements required or contemplated by the Transaction
Documents to be performed by it on or prior to the Transfer Date.




          4.1.3. Governmental Approvals. The Governmental Approvals applicable to the Transfer
shall have been obtained and shall be in full force and effect.




          4.1.4. Legal Proceedings; No Injunction. No action or proceedings before any court or
Governmental Authority shall be pending or threatened wherein an unfavorable judgment, decree or
order would (a) prevent the carrying out of this Agreement, or any of the transactions contemplated
herein, (b) declare unlawful the transactions contemplated by this Agreement, (c) cause such
transactions to be rescinded, (d) permit consummation of the transactions contemplated herein or
therein subject to the imposition of substantial damages on Buyer, or (e) materially affect the
right of Buyer to own the Transferred Assets.




          4.1.5. Certificates and Other Documents. Seller shall have executed and delivered the
certificates and other documents required by Article 3.




          4.1.6. No Material Adverse Effect. Subsequent to the date hereof, there shall have
occurred no uncured casualty or other event or change which has resulted in a Material Adverse
Effect.




          4.1.7 Other Agreements. Seller has no legal obligation to any other person or entity
to: (a) sell the Transferred Assets, or (b) to enter into any agreement with respect to the same.




     4.2. Conditions to Seller’s Obligations. The obligation of Seller to consummate any
Transfer shall be subject to the satisfaction, on or prior to the Transfer Date, of each of the
following conditions, any of which may be waived by Seller in writing:



          4.2.1. Representations and Warranties. All representations and warranties of Buyer
made in this Agreement shall be true and correct in all material respects as of the Transfer Date
except for such representations and warranties that are made expressly as of an earlier date which
shall be true and correct as of date made.




          4.2.2. Covenants. Buyer shall have performed and complied with all covenants and
agreements required or contemplated by the Transaction Documents to be performed by it on or prior
to the Transfer Date, including the delivery of all Transaction Payments by the applicable Payment
Dates (except where the Payment Date has not yet arrived).




          4.2.3. Governmental Approvals. All Governmental Approvals applicable to the Transfer
shall have been obtained and shall be in full force and effect.





6









 








          4.2.4. Legal Proceedings; No Injunction. No action or proceeding before any court or
Governmental Authority shall be pending or threatened wherein an unfavorable judgment, decree or
order would (a) prevent the carrying out of this Agreement or any of the transactions contemplated
herein (b) declare unlawful the transactions contemplated by this Agreement (c) cause such
transactions to be rescinded, or (d) permit consummation of the transactions contemplated herein
subject to the imposition of substantial damages on Seller.




          4.2.5. Certificates and Other Documents. Buyer shall have delivered the certificates
and other documents required under Article 3.




ARTICLE 5




REPRESENTATIONS AND WARRANTIES




     5.1 Buyer’s Representations and Warranties. Buyer represents and warrants to Seller
that:



          5.1.1 Organization. Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida, with full authority (i) to execute and
deliver the Transaction Documents, to consummate the Transactions and to perform all of its
obligations under the Transaction Documents, and (ii) to own, lease or otherwise hold the assets
owned, leased or held by it. Buyer has obtained all corporate approvals necessary to authorize the
execution, delivery and performance of this Agreement, and Buyer has obtained, or will have
obtained prior to each Transaction, all corporate approvals necessary to consummate the
Transactions and authorize the execution, delivery and performance of the Transaction Documents.




          5.1.2 Authority. This Agreement has been, and when executed by Buyer each of the
other Transaction Documents will be, duly and validly executed and delivered by Buyer. This
Agreement constitutes, and when executed by Buyer each of the other Transaction Documents will
constitute, the valid and binding agreement of Buyer enforceable against Buyer in accordance with
its terms, except to the extent that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other Laws relating to creditors’ rights generally and by
principles of equity.




          5.1.3. No Restrictions Against Transactions. The execution, delivery and performance
of this Agreement and the Transaction Documents by Buyer do not, and the fulfillment by Buyer of
its obligations under this Agreement and the Transaction Documents will not, conflict with, violate
or result in the breach of any provision of (i) the Articles of Incorporation or Bylaws of Buyer or
(ii) any contract, agreement, instrument or other legally binding arrangement to which Buyer is a
party or by which any of Buyer’s assets are bound. The execution, delivery and performance of this
Agreement and the Transaction Documents by Buyer will not, to Buyer’s Knowledge, violate any Law.
Except for the FCC Approvals and PUC Approvals the parties contemplate obtaining pursuant to
Sections 6.4.3 and 6.4.4 of this Agreement, Buyer’s execution, delivery and performance of this
Agreement and the Transaction




7









 








Documents do not require authorization or approval of, or filing with, any Governmental Authority.
At the time of Transfer of each Transaction, Buyer will have all required certifications, permits
and licenses necessary and required to own and operate the Transferred Assets.




          5.1.4. Brokers. Buyer has not paid or become obligated to pay any fee or commission
to any broker, finder, investment banker or other intermediary in connection with the transactions
contemplated by this Agreement in such a manner as to give rise to a valid claim against Seller for
any broker’s or finder’s fees or similar fees or expenses.




          5.1.5 Litigation. As of the date hereof there are no actions, suits, proceedings,
claims, arbitrations or investigations, either at law or in equity, of any kind now pending (or to
Buyer’s Knowledge threatened) against Buyer (i) that question the validity of any of the
Transaction Documents or the Transactions; or (ii) that seek to delay, prohibit or restrict in any
manner any actions taken or contemplated to be taken by Buyer under the Transaction Documents.




     5.2. Seller’s Representations and Warranties. Seller represents and warrants to Buyer
that:



          5.2.1 Organization. Seller is a corporation duly and validly existing and in good
standing under the laws of the State of Delaware. Seller has full corporate power and authority to
execute and deliver the Transaction Documents, to consummate the Transactions and to perform all of
its obligations under the Transaction Documents. Seller has obtained all corporate and partnership
approvals necessary to consummate the Transactions and authorize the execution, delivery and
performance of the Transaction Documents.




          5.2.2. Authorization, Execution and Delivery. This Agreement has been, and when
executed by Seller each of the other Transaction Documents will be, duly and validly executed and
delivered by Seller. This Agreement constitutes, and when executed by Seller each of the other
Transaction Documents will constitute, the valid, legal and binding agreement of Seller enforceable
against Seller in accordance with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or other Laws relating to
creditors’ rights generally and by principles of equity.




          5.2.3 Transferred Assets. Seller has good title to all of the Transferred Assets and
shall deliver same free and clear of all Encumbrances (except for any necessary security interest
delivered by Buyer to Seller pursuant to Section 1.3) to Buyer at any applicable Transfer Date. The
Transferred Assets are in reasonable operating condition and free from known material defects.




          5.2.4. Governmental Authorization. Except for the FCC Approvals and PUC Approvals the
parties contemplate obtaining pursuant to Sections 6.4.3 and 6.4.4 of this Agreement, Seller’s
execution, delivery and performance of this Agreement and the Transaction Documents do not require
authorization or approval of, or filing with, any Governmental Authority.




8









 








          5.2.5. Litigation. As of the date hereof there are no actions, suits, proceedings,
claims, arbitrations or investigations, either at law or in equity, of any kind now pending (or to
Seller’s Knowledge threatened) against Seller (i) that relate to the Transferred Assets; (ii) that
question the validity of any of the Transaction Documents or the Transactions; or (iii) that seek
to delay, prohibit or restrict in any manner any actions taken or contemplated to be taken by
Seller under the Transaction Documents.




          5.2.6. Tax Matters. All taxes and assessments, including interest and penalties
thereon, of any kind whatsoever accrued with respect to the Business through the each Transfer Date
(other than Transfer Taxes and taxes subject to proration pursuant to Section 1.4) have been or
will be paid in full by Seller. There are no liens for federal, state or local taxes upon the
Transferred Assets, except for statutory liens for taxes or assessments not yet delinquent or the
validity of which is being contested in good faith by Seller in appropriate proceedings, the
ultimate liability for which shall remain the obligation of Seller. Seller has timely filed, or
will cause to be timely filed, all material federal, state and local tax returns and reports of any
kind (including income, franchise, sales, use, excise, employment and real and personal property)
which Seller is obligated to file with respect to the Business for all periods up to and including
the each Transfer Date.




          5.2.7. No Material Violation. The execution and delivery by Seller of the Transaction
Documents and the consummation by Seller of the Transactions do not and will not: (i) conflict with
or violate any provision of the Articles of Incorporation or Bylaws (or comparable governing
documents or instruments) of Seller or any legally binding agreement to which Seller is a party to
or by which any of the Transferred Assets are bound; (ii) except as set forth in Section 5.2.4 and
subject to receipt of the FCC Approvals and PUC Approvals the parties contemplate obtaining
pursuant to Sections 6.4.3 and 6.4.4 of this Agreement, violate any applicable Law issued, enacted,
entered or deemed applicable by any Governmental Authority having jurisdiction over Seller or any
of the Transferred Assets; or (iii) result in the creation or imposition of any Encumbrance on any
of the Transferred Assets, except for any security interest delivered by Buyer to Seller pursuant
to Section 1.3.




          5.2.8. Brokers. Seller has not paid or become obligated to pay any fee or commission
to any broker, finder, investment banker or other intermediary in connection with the transactions
contemplated by this Agreement in such a manner as to give rise to a valid claim against Buyer for
any broker’s or finder’s fees or similar fees or expenses.




          5.2.9 Absence of Undisclosed Liabilities. Seller has no known liabilities or
obligations which could have a Materially Adverse Effect on the value of the Transferred Assets.




          5.2.10. Customer Contracts. All Customer Contracts listed in Exhibit C hereto are in
full force and effect and without material default on the part of Seller.




ARTICLE 6




COVENANTS




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     6.1. Covenants of Seller.



          6.1.1. Satisfaction of Conditions. Seller will satisfy all of the conditions to each
Transfer to be performed or satisfied by Seller.




          6.1.2. Maintenance and Conduct of Business. From the date of this Agreement to each
Transfer Date, the Seller will cause the Business to be conducted consistent with the ordinary and
normal course of the Business existing prior to the date of this Agreement and will use its best
commercial efforts to preserve business relationships of the Business with customers, suppliers and
others having regular business dealings with it.




          6.1.3. Consent to Assignment. To the extent that the Transfer of any Transferred
Asset shall require the consent of another person, this Agreement shall not constitute an agreement
to assign the Transferred Asset if an attempted assignment would constitute a breach thereof.
Prior to the Transfer, both parties shall use their best commercial efforts to obtain the consent
of any other party to the assignment of such Transferred Asset to Buyer.




          6.2. Confidentiality and other Post-Transfer Restrictions on Seller. Seller agrees
that for the period ending March 31, 2009 Seller will be bound by the following:




          6.2.1. Confidentiality. Except as required by law, rule or regulation or court order,
all information, whether or not written, regarding the Business and the Transferred Assets will be
kept in confidence by Seller and (a) not used by Seller for its personal advantage, and (b) not
disclosed or made available by Seller for use by any third parties.




          6.2.2. Non-Competition. Seller will not engage directly or indirectly in the conduct
or management of, or own a controlling interest in, any VoIP network-based business which competes
or is competitive with the Business. Nothing in this Article 6 will be construed to limit Seller’s
right to engage in telecommunications related businesses other than the line of business to be sold
under this Agreement.



          6.2.3. Non-Solicitation. Seller will not solicit any officer, director, executive or
other employee of Buyer to leave his or her employment.




          6.2.4. Reasonableness. Buyer and Seller acknowledge that the covenants in 6.2.1.
through 6.2.3. above are reasonable and no greater than is necessary for the protection of Buyer.




          6.2.4. Successors/Other Assets. The parties agree that nothing contained in this
section 6 shall restrict any successor, following a change of control, of the Seller from engaging
in the Business or using the Business Knowledge. In addition,
nothing in this Article 6 shall
restrict the Seller from continuing to market and sell any assets contained within the portion of
Business not purchased by the Buyer.




     6.3. Confidentiality and other Post-Transfer Restrictions on Buyer. Buyer agrees
that it shall be restricted in its ability to further transfer any Customer to any third party
service provider as follows:



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          6.3.1. Seller Consent. Until such time that Buyer has satisfied all payment
obligations established under Sections 1.3, 1.3.1 and 1.3.2, Buyer shall only be allowed to
transfer Customers to an alternative service provider with the written consent of Seller which
Seller may withhold until Buyer’s payment obligations have been fulfilled.




          6.3.2. Reverting of Customers. Should Buyer cease to offer Customer services
in the ordinary course of its business before Transition of all Customers hereunder, all Customers
shall, at Sellers option, revert back to Seller at zero cost to Seller, unless other arrangements
are mutually agreed by the parties.




     6.4. Mutual Covenants.



          6.4.1. Public Announcements. The parties agree that following the execution of this
Agreement, the parties will jointly issue a press release in the form attached hereto as Exhibit D.
Except as set forth in the preceding sentence, neither party may publicly announce the signing of
this Agreement and the Transactions contemplated herein before or after any Transfer without the
prior written approval of the other party, except as and to the extent that such party is required
to so disclose such information by Law or rule of any stock exchange. In such event, such
disclosing party shall advise the other party of the disclosure required and shall provide the
other party with a copy of the disclosure to be made, and shall use commercially reasonable efforts
to cause a mutually acceptable release, announcement or filing to be made.




          6.4.2. Cooperation. Except as expressly provided otherwise in this Agreement, each
party covenants to use all commercially reasonable efforts to take or cause to be taken all
actions, and to do or cause to be done all things, that are necessary, proper or advisable under
applicable Laws and regulations, expeditiously and practicably to consummate and make effective the
Transactions, including but not limited to (i) using its commercially reasonable efforts to resolve
any disagreements between Buyer and Seller with respect to any applications for governmental or
regulatory approval prior to application for such approval, (ii) obtaining all necessary actions,
waivers, consents and approvals from third parties or Governmental Authorities, (iii) effecting
all necessary filings with Governmental Authorities, and (iv) developing a list of tasks essential
to the transition and administration of the portion of the Business relating to the Transferred
Assets and a seamless as possible transition to Buyer (including but not limited to those in 6.4.3
through 6.4.4 below) and assigning responsibilities and completion dates for the performance of
such tasks, The Statement of Work in Exhibit A represents the parties agreement with respect to
such tasks and responsibilities as of the date of execution of this Agreement. To the extent that
either Party undertakes responsibility for developing and implementing processes and procedures for
the other Party which are outside the scope of this Agreement or the Statement of Work, the parties
will either amend the applicable terms of this Agreement or add the additional tasks to the
Statement of Work by an appropriate change order.




          6.4.3. PUC Filings. Promptly after the execution of this Agreement, each of the
parties will take such reasonable actions as may be necessary or helpful (including, but not
limited to, making available witnesses, information, documents, and data requested by the PUC) to
apply for and receive all approvals necessary from PUCs for the transfer of the Transferred




11









 








Assets to Buyer and the change in the provider of telecommunications services to the Customers.
Seller and Buyer will work together to prepare any applications and customer notice waivers
required to be filed with PUCs and will diligently pursue the fulfillment of these obligations
utilizing their best efforts to complete such activities in a timely manner. Seller shall take the
lead in preparing petitions to discontinue current service offerings related to the Transferred
Assets as required, if any. Buyer and Seller will share all costs and expenses relating to such
filings equally.




          6.4.4. FCC Filings. The parties agree to promptly file after execution of this
Agreement such applications and to take such reasonable actions as may be necessary or helpful to
apply for and receive approval by the FCC for the transfer of the Transferred Assets to Buyer.
Seller and Buyer will work together to prepare the applications and customer notice waivers to be
filed with the FCC and will diligently pursue the fulfillment of these obligations utilizing their
best efforts to complete such activities in a timely manner. Seller shall take the lead in
preparing petitions to discontinue current service offerings related to the Transferred Assets as
required, if any. Buyer and Seller will share all costs and expenses relating to such filings
equally.




          6.4.5. Buyer State Filings. Buyer shall be responsible for filing any required
affidavits regarding its status as the “acquiring carrier” as well as any future tariffs relating
to new rate plans.




ARTICLE 7




TERMINATION




     7.1. Termination By Buyer. If any condition precedent to Buyer’s obligation to effect
any of the Transfers set forth in Section 4.1 shall become incapable of satisfaction through no
fault of Buyer and such condition is not waived by Buyer, Buyer shall not be obligated to effect
the Transfer and may terminate this Agreement by written notice to Seller. If Seller materially
breaches any provisions of this Agreement, and such breach remains uncured for thirty (30) days
after notice from Buyer, Buyer may terminate this Agreement upon written notice to Seller.



     7.2. Termination By Seller. If any condition precedent to Seller’s obligation to
effect any Transfer set forth in Section 4.2 shall become incapable of satisfaction through no
fault of Seller and such condition is not waived by Seller, Seller shall not be obligated to effect
the Transfer and may terminate this Agreement by written notice to Buyer. If Buyer materially
breaches any provisions of this Agreement, and such breach remains uncured for thirty (30) days
after notice from Seller, Seller may terminate this Agreement upon written notice to Buyer.



     7.3. Termination By Buyer or Seller. If (i) a final, non-appealable order is issued
by any Governmental Authority to restrain, enjoin or prohibit the consummation of any of the
Transactions, or (ii) the Transfer with respect to any of the Customer Contracts shall not have
occurred on or before April 30, 2007 or any other or subsequent date to which the parties may
mutually agree, then either party may terminate this Agreement by written notice to the other.
Notwithstanding the foregoing, if a non-appealable order is issued by a state PUC to restrain,



12









 







enjoin or prohibit the consummation of any of the Transactions, then within ten (10) days of
the date such an order becomes final and non-appealable, the Buyer and Seller will initiate good
faith negotiations to modify the Agreement to address the terms of the PUC order. If the parties
are unable to successfully modify the Agreement, either party shall, at its option, have the right
to terminate this Agreement by written notice to the other party.



     7.4. Effect of Termination. In the event of the termination of this Agreement
pursuant to this Article 7, the terms of any Transfer not yet effected, and this Agreement shall
thereafter become void and there shall be no further liability on the part of any party hereto or
its respective shareholders, directors, officers or employees in respect thereof, except as
follows: (i) nothing herein shall relieve any party from liability for any intentional breach of
this Agreement, and (ii) the rights and obligations of the parties hereto with respect to Transfers
already effected will not be affected.



ARTICLE 8




ADDITIONAL MATTERS




     8.1. Pre-Transfer. In order to effectuate orderly Transitions in the provision of
telecommunications services to Customers, Buyer and Seller agree to utilize the measures set forth
below:



          8.1.1. Collection of Receivables. Each billing party will collect its own
receivables, as described in the Statement of Work in Exhibit A




          8.1.2. Notice to Customers. Buyer and Seller agree that Buyer, in cooperation with
Seller, will deliver multiple written notifications to each Customer in order to meet requisite
regulatory standards and to facilitate an orderly Transition of services to Buyer with minimal
attrition. All such written notifications shall be provided to Seller in advance of any use
thereof, and shall be in form reasonably acceptable to Seller. In no less than the last bill
delivered to each Customer by the Seller, the Customers shall be informed that Seller will no
longer be the Customer’s telecommunications provider and Customers shall be provided the name,
address and telephone number of Buyer, including the payment information relating to the newly
established lock-box and a request that all such payments due on the last Seller issued or any
prior bill be directed to the new payment location.




     8.2. Customer Records. To the extent not previously provided to Buyer, Seller shall
maintain all billing and service records for goods sold or services provided, including any
third-party verifications, to Customers prior to Transfer until the later of one year from the
Transfer Date or the minimum time required by Law. Seller shall make available, upon reasonable
request from Buyer, all such billing and service records. Such records will be provided without
cost to the Buyer and will include applicable third party verifications and letters of
authorization associated with end user subscriptions.



     8.3. Carrier Access Billing. Seller shall render its own final carrier access bills
to its interexchange carriers for minutes, messages and other applicable charges. Seller shall be



13









 







responsible for collecting and settling any disputes associated with its final carrier access
billings to interexchange carriers, and there shall be no adjustment to the Purchase Price for any
bad debts of these interexchange carriers.



     8.4. New Customer Service Orders and Service Change Orders. Except as Seller and
Buyer may otherwise agree, (i) after customers are Transitioned to Buyer following the Transfer
Date(s), Buyer shall be responsible for processing all new customer service requests and service
change order requests submitted by customers or applicants for service, and (ii) Seller shall
forward within ten (10) business days any new customer service orders or service change orders
received by Seller to Buyer for service.



     8.5. Access to Books and Records.




          8.5.1. After the final Transfer, Seller will retain all Retained Books and Records for a
period of three (3) years.




          8.5.2. After the final Transfer, upon reasonable notice the parties will give to the
representatives, employees, counsel and accountants of the other party reasonable access during
normal business hours, to books and records relating to the Transferred Assets and the Assumed
Liabilities, and will permit such persons to examine and copy such records, in each case to the
extent reasonably requested by the other party in connection with tax and financial reporting
matters (including any tax returns and related information, but not attorney work product), audits,
legal proceedings, governmental investigations and other business purposes (including such
financial information and any receipts evidencing payment of taxes as may be requested by Seller to
substantiate any claim for tax credits or refunds); provided, however, that nothing herein will
obligate any party to take actions that would unreasonably disrupt the normal course of its
business or violate the terms of any contract to which it is a party or to which it or any of its
assets is subject. Seller and Buyer will cooperate with each other in the conduct of any tax audit
or similar proceedings involving or otherwise relating to the Business (or the income therefrom or
assets thereof) with respect to any tax and each will execute and deliver such powers of attorney
and other documents as are necessary to carry out the intent of this Section 8.5.2.




     8.6. Bulk Sales Laws. Seller and Buyer waive compliance with applicable laws under
any version of Article 6 of the Uniform Commercial Code adopted by any state or any similar Law
relating to the sale of inventory, equipment or other assets in bulk in connection with the sale of
the Transferred Assets.



     8.7. Post-Transfer Support. Until June 30, 2007, Seller agrees to provide to the
Buyer all services necessary to providing services to the Customers until those Customers are fully
Transitioned to the Buyer’s network facilities. Provision of services by the Buyer under this
Section 8.7 shall be subject to the terms and conditions contained in the Statement of Work in
Exhibit A as the same may be amended by the parties from time to time.



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ARTICLE 9




SURVIVAL AND INDEMNIFICATION




     9.1. Survival. The representations and warranties made in this Agreement, the
Schedules and the certificates to be delivered by the parties shall survive for a period of twelve
(12) months following each Transfer Date (except for Sections 5.2.3, which shall survive
indefinitely, and Section 5.2.6 which shall survive for the applicable statute of limitations),
except to the extent such party, at or prior to a Transfer Date, shall have actual knowledge of a
breach or inaccuracy of a representation or warranty of the other party. No claim may be made for
the breach of a representation or warranty made in this Agreement unless notice of such claim has
been delivered to the breaching party prior to the expiration of the representation or warranty.



     9.2. Indemnification and Payment of Damages by Seller. Subject to the limitations set
forth in Section 9.6, Seller will indemnify and hold harmless Buyer and its respective
representatives, stockholders, controlling persons and Affiliates (collectively, the “Indemnified
Persons”) for, and will pay to such Indemnified Persons the amount of, any loss, liability, claim,
damage expense (including costs of investigation and defense and reasonable attorneys’ fees),
whether or not involving a third-party claim (collectively, “Damages”), arising, directly or
indirectly, from or in connection with (a) any breach of representation or warranty made by Seller
in this Agreement, (b) any breach of any covenant or obligation of a Seller in this Agreement; (c)
the use, operation or conduct of the Transferred Assets prior to the Transfer Date; (d) the
Excluded Assets or the Retained Liabilities; or (e) any claim by any person for brokerage or
finder’s fees or commissions or similar payments based upon any agreement or understanding alleged
to have been made by any such person with Seller (or any person acting on its behalf) in
connection with any of the contemplated transactions.



     9.3. Indemnification and Payment of Damages by Buyer. Subject to the limitations set
forth in Section 9.7, Buyer will indemnify and hold harmless Seller and its Indemnified Persons
for, and will pay to such Indemnified Persons the amount of, any Damages arising, directly or
indirectly, from or in connection with (a) any breach of representation or warranty made by Buyer
in this Agreement; (b) any breach of any covenant or obligation of Buyer in this Agreement; (c) the
use, conduct or operation of the Transferred Assets from and after the Transfer Date solely to the
extent that any such Damages result from events occurring on or after the Transfer Date, (d) the
failure of Buyer to perform any of the Assumed Liabilities, and (e) any claim by any person for
brokerage or finder’s fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such person with Buyer (or any person acting on its
behalf) in connection with any of the contemplated transactions.



     9.4. Procedure for Indemnification – Third Party Claims.



          9.4.1. Promptly after receipt by an Indemnified Person under Section 9.2 or 9.3 of notice of
the commencement of any claim (a “Proceeding”) against it, such Indemnified Person shall, if a
claim is to be made against an indemnifying party under such section, give notice to the
indemnifying party of the commencement of such claim, but the failure to notify the




15









 







indemnifying party will not relieve the indemnifying party of any liability that it may have to any
Indemnified Person, except to the extent that the indemnifying party demonstrates that the defense
of such action is prejudiced by the Indemnified Person’s failure to give such notice.




          9.4.2. If any proceedings referred to in Section 9.4.1 is brought against an Indemnified
Person and it gives notice to the indemnifying party of the commencement of such Proceeding, the
indemnifying party shall, be entitled to participate in such Proceeding and, to the extent that it
wishes (unless the indemnifying party is also a party to such Proceeding and the Indemnified Person
determines in good faith that joint representation would be inappropriate) to assume the defense of
such Proceeding with counsel reasonably satisfactory to the Indemnified Person and, after notice
from the indemnifying party to the Indemnified Person of its election to assume the defense of such
Proceeding, the indemnifying party will not, as long as it diligently conducts such defense, be
liable to the Indemnified Person under this Article 9 for any fees of other counsel or any other
expenses with respect to the defense of such Proceeding, in each case subsequently incurred by the
Indemnified Person in connection with the defense of such Proceeding, other than reasonable costs
of investigation. If the indemnifying party assumes the defense of a Proceeding, (i) no compromise
or settlement of such claims may be effected by the indemnifying party without the Indemnified
Person’s consent unless (A) there is no finding or admission of any violation of legal
requirements or any violation of the rights of any Person and no effect on any other claims that
may be made against the Indemnified Person, and (B) the sole relief provided is monetary damages
that are paid in full by the indemnifying party; and (ii) the Indemnified Person will have no
liability with respect to any compromise or settlement of such claims effected without the consent
of such Indemnified Person. In no event will the Indemnified Person consent to the entry of any
judgment or enter into any settlement with respect to a Proceeding without the prior written
consent of the Indemnifying Person, which consent shall not be unreasonably withheld.




     9.5. Procedure for Indemnification – Other Claim. A claim for the indemnification for
any matter not involving a third-party claim may be asserted by notice to the party from whom
indemnification is sought.



     9.6. Limitations on Seller’s Indemnification of Purchaser. Notwithstanding any other
provision to the contrary, Seller shall be obligated to indemnify Buyer and its Indemnified Persons
only to the extent that the amount of such Damages, when aggregated with the total amount of other
claims for indemnification under Section 9.2, does not exceed $250,000 and (ii) any such claims are
made upon Seller in writing prior to the close of business on the second anniversary of the
Transfer Date.



     9.7. Limitations on Buyer’s Indemnification of Seller. Notwithstanding any other
provision to the contrary, Buyer shall be obligated to indemnify Seller and its Indemnified Persons
only to the extent that the amount of such Damages, when aggregated with the total amount of other
claims for indemnification under Section 9.3, does not exceed $250,000, and (ii) any such claims
are made upon Buyer in writing prior to the close of business on the second anniversary of the
applicable Transfer Date. However, nothing in the preceding sentence will limit indemnification by
the Buyer in any manner in regard to the Buyer’s compliance with published rules and regulations of
state public service commissions and the Federal



16









 







Communications Commission, which apply directly to Buyer’s conduct of the Business sold hereunder.



ARTICLE 10




WAIVER OF TRIAL BY JURY AND RESOLUTION OF DISPUTES




     10.1. Waiver of Trial by Jury. Each party waives its right to a jury trial in any
court action arising between the parties, whether under this Agreement or otherwise related to this
Agreement, and whether made by claim, counterclaim, third party claim or otherwise. If for any
reason the jury waiver is held to be unenforceable, the parties agree to binding arbitration under
the applicable commercial rules of the American Arbitration Association and 9 U.S.C. § 1, et seq.
Any arbitration will be subject to the Governing Law provision set forth in Section. 12.9.
Discovery in the arbitration will be governed by the Federal Rules of Civil Procedure. The
determination of the arbitrator shall be final, binding and conclusive upon the parties and
enforceable in a court of competent jurisdiction. The agreement of each Party to waive its right
to a jury trial will be binding on its successors and assignees.



     10.2. Dispute Resolution. If a dispute arises under this Agreement the parties shall
endeavor to resolve it first by amicable, private negotiations, and each party shall provide a
representative to such negotiations with authority to settle the matter. If, for whatever reason,
the parties are unable to resolve a dispute as aforesaid, they shall appoint a neutral, qualified
intermediary with experience resolving disputes of a similar nature, such as a mediator with
authority to render a binding decision, an arbitrator, or other similarly qualified person who is
given binding authority to settle the dispute. If the parties are unable to agree on a qualified
intermediary, each shall designate legal counsel to select an appropriate individual for them, or,
if necessary, two individuals, one for each of them, along with authority for the two so selected
to appoint a third.qualified intermediary. The person or persons so selected shall conduct the
proceedings in accordance with such conventional rules and procedures as may be equitable and
appropriate in the circumstances, and the parties agree that the decision of such intermediary(ies)
shall be final and binding on each of them, enforceable in any court of competent jurisdiction.
Costs and fees shall be shared equally by the parties. No resolution so reached shall include
special, consequential or incidental damages.



ARTICLE 11




CERTAIN DEFINITIONS




     11.1. Defined Terms. For purposes of this Agreement, certain terms used in this
Agreement and not otherwise defined herein shall have the meanings designated below:



17









 





     “Affiliate” of a specified entity means any legal entity directly or indirectly
controlling, controlled by, or under the common control with the specified entity. The term
“control” (including “controlling,” “controlled by” and “under common control with”) of an entity
means the possession, directly or indirectly, of the power to (i) vote 50% or more of the voting
securities or other voting interests of such person, or (ii) direct or cause the direction of the
management and policies of such entity, whether through the ownership of voting shares, by contract
or otherwise. “Agreement” means this Agreement for Purchase and Sale of Customers Line’s,
together with all Schedules and Exhibits hereto, as any of the foregoing may be amended, modified
or supplemented in writing from time to time.



     “Assumed Liabilities” means any and all of the following liabilities and obligations
of Seller relating directly to the Transferred Assets.



     (a) to the extent arising out of events occurring after the Transfer Date, all liabilities and
obligations of Seller or its Affiliates arising under the Customer Contracts and the Permits
pursuant to Buyer’s existing Tariffs;



     (b) All liabilities and obligations arising out of litigation and claims relating to the
Customer Contracts arising out of events occurring after the Transfer Date;



     (c) All obligations of Seller to timely pay compensation to independent sales organizations
and individuals in connection with revenues derived by Buyer from Customer Contracts and accounts
Transferred hereunder as set forth on Exhibit E, attached hereto and incorporated herein;



     (d) Except for Assumed Liabilities Buyer does not assume any liabilities or obligations of
Seller or its Affiliates of any nature, whether direct, contingent or otherwise, including,
without limitation, any liabilities or obligations of the Business prior to the Transfer.



     “Business” means Seller’s business of providing voice and data services via Seller’s
VoIP-based network.



     “Buyer” is defined in the preamble of this Agreement.



     “Buyer’s Knowledge” means the actual knowledge of Buyer after reasonable
investigation.



     “Code” is defined in Section 1.5.



     “Customer” means an end user customer of the Business and where applicable includes
such end users after the Transfer has occurred.



     “Customer Access Line” means a Customer access line.



     “Customer Contracts” means all contracts, agreements, instruments and other legally
binding arrangements (and all amendments and modifications thereto) relating to the provision of
VoIP-based voice and data services by Seller to an end user, and all such contracts, agreements



18









 







and instruments entered into by a Seller in the ordinary course of the Business between the
date of this Agreement and the applicable Transfer Date relating to the provision of services to
the Customers. A list of all Customer Contracts as of the date of this Agreement is attached hereto
as Exhibit C. .



     “Encumbrances” means any and all security interests, liens, charges or similar
restrictions, except for (i) liens for taxes not yet due and payable or that are being contested in
good faith, (ii) liens of workers, carriers or materialmen or similar liens arising by operation of
Law in the ordinary course of the Business in respect of obligations that are not yet due and
payable or that are being contested in good faith, and (iii) any liens, defects or irregularities
that are the result of Buyer’s or its representative’s actions.



     “Excluded Assets” means, any of the following:



     (a) all assets, properties and rights of Seller and its Affiliates, including the name
“Trinsic” and other names used by Seller to denote its legal existence, , associated with other
lines of business of Seller and its affiliates that are not the subject of this Agreement (i.e. the
Business);



     (b) this Agreement and all rights of Seller under this Agreement;



     (c) the Retained Books and Records;



     (d) all cash or cash equivalents of Seller and its Affiliates, including, without limitation,
checks or drafts received by the Business for which Seller has not received funds on or prior to
the Transfer Dates, certificates of deposit, time deposits and marketable securities; and all of
the right, title and interest in the bank accounts, safe deposit boxes and checking accounts of
either Seller, its Affiliates and the Business;



     (e) all rights to refunds of all federal, state, local and foreign taxes relating to Seller or
its Affiliates, the Transferred Assets or the Business to the extent such taxes relate to a period
ending on or prior to the Transfer Date and were not paid or assumed by Buyer;



     (f) all accounts receivable, inventory and fixed assets of Seller and its Affiliates other
than those set forth in Exhibits attached hereto;.



     (g) all real property and interests in real property owned by Seller and its Affiliates; and



     (h) all policies of insurance and fidelity, surety or similar bonds and the
coverages afforded thereby, and any and all claims or rights thereunder;



     (i) Buyer shall have no liability or obligation with respect to any Excluded
Assets.



     “FCC” means the Federal Communications Commission or any other Federal agency which
succeeds in whole or in part to its jurisdiction so far as the subject matter of this Agreement is
concerned.



19









 






     FCC Approval” means the approval of the FCC to completion of the transactions
contemplated hereunder.



     “Governmental Approval” means the PUC Approval, the FCC Approval and all consents and
approvals of, filings and registrations with, and notifications to any other Governmental Authority
necessary to consummate the transactions contemplated by this Agreement.



     “Governmental Authority” means any United States, state or local governmental entity
or municipality or subdivision thereof or any authority, department, commission, board, bureau,
agency, court or instrumentality thereof.



     “Law” or “Laws” means any statute, rule, regulation or ordinance of any
Governmental Authority.



     “Material Adverse Effect” means a materially adverse effect on the Business or the
Transferred Assets, taken as a whole, other than effects relating to or arising from (i) the
execution of this Agreement, (ii) the United States economy generally (iii) events or
circumstances that affect the Business in the same manner and to the same extent as other
businesses in the industry generally;or (iv) other claims or actions of any kind or nature against
Seller relating to the Transferred Assets.



     “Payment Date” is the date on which Buyer is to make a Transaction Payment under this
Agreement.



     “Permits” means all permits of any Governmental Authority relating to the Transferred
Assets.



     “Person” means any individual, sole proprietorship, partnership, limited liability
company, joint venture, trust, unincorporated association, corporation, entity or government
(whether federal, foreign, state, county, city or otherwise, including any instrumentality,
division, agency or department thereof).



     “PUC” means a state ublic utility commission or equivalent regulatory body.



     “PUC Approval” means the approval of a PUC to completion of the transactions
contemplated hereunder.



     “Proration Periods” is defined in Section 1.4.



     “Purchase Price” is defined in Section 1.3.



     “Required Consents” the consents required in Section 3.2.4.




     “Retained Books and Records” means, collectively, all corporate records and stock
books of Seller and their Affiliates, the general ledger, all records required by Law to be
retained by Seller and all books and records relating to (i) tax returns and tax records; (ii) the
Excluded Assets; (iii) the organization, maintenance and existence of Seller as a corporation or
partnership;



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and (iv) attorney work product; provided that where reasonably necessary or prudent, Retained
Books and Records shall also include copies of the Transferred Books and Records.



     “Retained Liabilities” is defined in Section 1.2 of this Agreement.



     “Seller” is defined in the preamble of this Agreement.



     “Seller’s Knowledge” means the actual knowledge of Seller after reasonable
investigation.



     “Transfer” means the transfer of ownership of the Transferred Assets and the
assumption of the Assumed Liabilities.



     “Transfer Date” is a date on which a Transfer takes place or is contemplated to take
place under this Agreement.



     “Transactions” means any or all of the Transfers, deliveries, payments contemplated by
the Transaction Documents in connection with the sale of the Business.



     “Transaction Documents” means this Agreement and each document referred to, described
in or contemplated by the Agreement. When used with respect to Seller or Buyer, “Transaction
Documents” means this Agreement and such documents as are required to be executed by such party
with respect to the Transactions.



     “Transaction Payment” means the payments of the Purchase Price described in Section
1.3. hereof.



     “Transfer Taxes” means any and all federal, state, county, municipal, foreign or other
taxing jurisdiction sales, use, transfer, gross receipts, consumer levy, privilege or similar
taxes, duties, excises or governmental charges, including any penalties and interest thereon,
arising out of the sale of the Transferred Assets by Seller to Buyer hereunder.



     “Transferred Assets” means all of Seller’s right, title and interest in and to the
following assets:



     (a) the Customer Contracts including any rights to collect contract termination fees for end
user disconnects that are effective after the date of this Agreement;



     (b) the equipment and other items listed in the Exhibits hereto and in the Statement of Work
and its attachments;



     (c) the Transferred Books and Records; and



     (d) With respect to Customer Contracts, Transferred Assets shall be limited to:




	 	(i)	 	those which the applicable Governmental Authority will permit
to be transferred to Buyer without a written and executed Letter of Authority;
and




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	 	(ii)	 	those for which Seller has obtained prior to the applicable
Transfer Date a written and executed Letter of Authority.





     (e) accounts receivable from Customer Contracts for services rendered by Buyer after the
applicable Transfer;



     (f) all marketing materials and product literature, trademarks, tradenames, logos, service
marks and other similar information used by Seller in connection with the portion of the
Business covered by the Transferred Assets.



     but excluding from the foregoing the Excluded Assets.



     “Transferred Books and Records” means copies of Seller’s customer lists and records,
accounts and billing records, plans, blueprints, specifications, drawings, surveys and engineering
reports that relate directly to the operation of the Business.



     “Transition” means the transfer of Customers from Seller’s softswitch to Buyer’s
softswitch.



     “Transition Date” means the date of completion for the conversion of a customer from
Seller’s softswitch to Buyer’s softswitch.



     11.2. Interpretation. Unless the context otherwise requires, (i) all references to
Sections, Articles or Schedules are to Sections, Articles or Schedules of or to this Agreement,
(ii) the term “primarily” means primarily or exclusively, and (iii) the term “including” means
including without limitation.



ARTICLE 12




GENERAL




     12.1. Notices. All notices hereunder will be in writing and served by certified mail,
return receipt requested. Notice shall be deemed to have been duly given on the earlier of the
date received or the fifth business day following the date mailed by the notifying party using
first class mail, postage prepaid. Notices shall be sent as follows:


If to Seller:



Trinsic Communications, Inc.

100 Brookwood Road

Atmore, AL 36502

Attention: Trey Davis

Facsimile: 251-368-1314




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with a required copy (which shall not constitute notice) to:



Trinsic Communications, Inc.

Andrew L. Graham, Legal Counsel

601 S. Harbour Island Boulevard, Suite 220

Tampa, FL 33602



Facsimile: 813-233-4623




     If to Buyer:


CommX Holdings, Inc.

3550 Buschwood Park Drive Suite 320

Tampa, FL 33618

Attn:Oscar Williams

Facsimile: 813-931-7369




     12.2. Waivers. No failure of a party to enforce a provision of this Agreement will be
construed as a general or a specific waiver of that provision, or of a party’s right to enforce
that provision, or of a party’s right to enforce any other provision of this Agreement. No waiver
of any breach of any covenant or other provision herein contained shall be deemed to be a waiver of
any preceding or succeeding breach, or of any other covenant or provision herein contained. No
extension of time for performance of any obligation or act shall be deemed to be an extension of
the time for performance of any other obligation or act.



     12.3. Payment of Expenses. Except as otherwise provided herein, each of the parties
shall pay all costs and expenses incurred or to be incurred by it in the negotiation and
preparation of this Agreement and in consummating and carrying out the Transactions, whether or not
the Transactions are consummated.



     12.4. Headings. The subject headings of the sections and subsections of this
Agreement are included only for purposes of convenience, and shall not affect the construction or
interpretation of any of its provisions.



     12.5. Counterparts; Facsimile. This Agreement may be executed in counterparts, each
of which shall be deemed an original and, when each of the parties hereto has executed and
delivered a counterpart to the other party, this Agreement shall be binding and effective even
though no single counterpart has been executed by both of the parties. This Agreement may be
executed and delivered by facsimile transmission, and a facsimile of this Agreement or of a
signature of a party will be effective as an original.



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     12.6. Successors and Assigns. This Agreement shall be binding on and shall inure to
the benefit of the parties hereto and their permitted successors and assigns; provided, however,
that no assignment shall be permitted except as provided for in this Agreement.



     12.7. Assignment. The rights and obligations of the parties to this Agreement or any
interest in this Agreement shall not be assigned, transferred, hypothecated, pledged or otherwise
disposed of without the prior written consent of the non-assigning party, which consent may be
withheld in such party’s sole discretion; provided, however, that Buyer or Seller may, without the
prior consent of the other party, assign its rights under this Agreement to any Affiliate.



     12.8. Additional Instruments and Assistance. Each party hereto shall from time to
time execute and deliver such further instruments, provide additional information and render such
further assistance as the other party or its counsel may reasonably request in order to complete
and perfect the Transactions.



     12.9. Governing Law. To the extent that federal law does not apply exclusively, this
Agreement shall be construed in accordance with the laws of the State of Florida (without reference
to the choice of law provisions of any jurisdiction).



     12.10. Severability. If any term or provision of this Agreement is held or deemed to
be invalid or unenforceable when applied to any person or circumstance, the remaining provisions of
this Agreement and the enforcement of such provision to other persons or circumstances shall not be
affected thereby, and each provision of this Agreement shall be enforced to the fullest extent
allowed by Law.



     12.11. Amendments. This Agreement may not be modified, changed, supplemented or
terminated, nor may any obligations hereunder be waived by a party, except by written instrument
signed by the party to be charged or by its agent duly authorized in writing or as otherwise
expressly permitted herein.



     12.12. No Construction. Each party hereto acknowledges that such party and its
counsel have reviewed this Agreement and participated in its drafting. This Agreement shall not be
construed against either party for having prepared it. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural will include the singular and
the plural, and pronouns stated in the masculine, feminine or neuter gender will include the other
genders. Moreover, the term “or” is not exclusive. The words “Agreement,” “hereof,” “herein” and
“hereunder” and words of similar import referring to this Agreement refer to this contract as a
whole (as it may be amended, modified, restated, or supplemented), including any schedules,
exhibits, addenda, annexes and other documents incorporated by reference (as they may be amended,
modified, restated, or supplemented) and not to any particular provision of this contract.
Whenever the word “include,” “includes” or “including” is used in this Agreement, it will not be
limiting or exclusive and will be deemed to be followed by the words “without limitation.” All



24









 







references in this Agreement to statutes and related regulations will include any amendments of and
any successor statutes and regulations. All references in this Agreement or in the schedules,
addenda, annexes or exhibits to this Agreement to sections, schedules, disclosure schedules,
exhibits, and attachments will refer to the corresponding sections, schedules, disclosure
schedules, exhibits, and attachments of or to this Agreement. All references to any instruments or
agreements, including references to this Agreement will include any and all modifications or
amendments thereto and any and all extensions or renewals thereof. The various headings contained
in this Agreement are inserted solely for convenience of reference and in no way define, limit or
extend the scope or intent of any of the provisions of this Agreement. Notwithstanding the
foregoing the parties agree that any conflict or inconsistency between the provisions of this
Agreement and those in the attached Exhibits A, B, and C shall be resolved in favor of the
provisions in the aforesaid Exhibits.



     12.13.  Entire Agreement; No Third Party Beneficiaries. This Agreement, including all
schedules and exhibits attached hereto, constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof, and there are no agreements, understandings, warranties
or representations between the parties with respect to such subject matter except as set forth or
noted herein. The parties do not intend to confer any benefit hereunder on any person, firm or
corporation other than the parties hereto.



     IN WITNESS WHEREOF, the parties to this Agreement for Purchase and Sale of Assets have
executed it as of the date first above written.



	 	 	 
	 

	 	BUYER:
	 
	 	 
	 

	 	CommX Holdings, Inc.
	 
	 	 
	 

	 	By:
	 

	 	 

	 

	 	Name:
	 

	 	 

	 

	 	Its:
	 

	 	 

	 
	 	 
	 

	 	SELLER:
	 
	 	 
	 

	 	TRINSIC COMMUNICATIONS, INC.
	 
	 	 
	 

	 	By:
	 

	 	 

	 

	 	Name:
	 

	 	 

	 

	 	Its:
	 

	 	 







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