Document:

exv10w3

Exhibit 10.3

THIS PROMISSORY NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THIS PROMISSORY
NOTE MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

THIS PROMISSORY NOTE IS SUBJECT TO RESTRICTIONS ON TRANSFER CONTAINED IN THAT CERTAIN NOTE AND
WARRANT PURCHASE AGREEMENT, DATED MARCH 12, 2009, WHICH RESTRICTIONS ON TRANSFER ARE INCORPORATED
HEREIN BY REFERENCE.

PROMISSORY NOTE

	 	 	 
	Up to $211,000

	 	March 12, 2009

San Francisco, California

     FOR VALUE RECEIVED, VIA Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
promises to pay to the order of Bay City Capital Fund IV Co-Investment Fund, L.P., or its
registered assigns (“Holder”), the principal amount outstanding from time to time under
this Promissory Note (the “Note”), with interest, on the outstanding principal amount at
the rate of fifteen percent (15%) per annum (computed on the basis of actual calendar days elapsed
and a year of 365 days) or, if less, at the highest rate of interest then permitted under
applicable law; provided, however, that from and after an Event of Default (as defined below), the
outstanding principal balance under this Note from time to time shall accrue interest at the rate
of eighteen percent (18%) per annum (computed on the basis of actual calendar days elapsed and a
year of 365 days) or, if less, at the highest rate permitted by applicable law (the
“Post-Default Rate”). Interest shall commence with the date hereof and shall continue on
the outstanding principal of this Note until paid.

     1. Definitions. For purposes of this Note, the following terms shall have the
following meanings (capitalized terms used herein but not otherwise defined shall have the meanings
provided therefor in that certain Note and Warrant Purchase Agreement (the “Agreement”)
dated as of March 12, 2009, by and among the Company and the investors set forth on Schedule A
thereto):

     “Business Day” means any day which is not a Saturday or Sunday or a legal holiday on
which banks are authorized or required to be closed in San Francisco, California.

     “Collateral” shall have the meaning assigned to such term in the Security Agreement.

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     “Control” shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a person, whether through the ownership of
voting securities, by contract or otherwise, and the terms “Controlling” and
“Controlled” (and the lower-case versions of the same) shall have meanings correlative
thereto.

     “Convertible Securities” shall mean evidences of Debt, shares of stock or other
securities or instruments which are convertible into or exchangeable for shares of common stock,
either immediately or upon the arrival of a specified date or the occurrence of a specified event.

     “Debt” shall mean all liabilities, obligations and indebtedness of every kind and
nature of any Person, including, without limitation: (1) indebtedness or liability for borrowed
money, or for the deferred purchase price of property or services (including trade obligations);
(2) obligations as lessee under any leases (including under any capital leases); (3) any
reimbursement or other obligations under any performance or surety bonds or any letters of credit
issued for the account of such Person; (4) all net obligations in respect of any derivative
products; (5) all guaranties, endorsements (other than for collection or deposit in the ordinary
course of business), and other contingent obligations to purchase, to provide funds for payment, to
supply funds to invest in any other Person, or otherwise to assure a creditor against loss; and (6)
obligations secured by any Lien on property owned by such Person, whether or not the obligations
have been assumed.

     “GAAP” means generally accepted accounting principles in the United States,
consistently applied.

     “Governmental Authority” shall mean any federal, state, local or other governmental
department, commission, board, bureau, agency or other instrumentality or authority, domestic or
foreign, exercising executive, legislative, judicial, regulatory or administrative authority or
functions of or pertaining to government.

     “Lien” shall mean any security interest, mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), claim or other priority or
preferential arrangement of any kind or nature whatsoever (other than a financing statement filed
by a lessor in respect of an operating lease not intended as security).

     “Material Adverse Effect” shall mean event, matter, condition or circumstance which
(i) has or would reasonably be expected to have a material adverse effect on the business,
properties, results of operations, condition (financial or otherwise) or prospects of the Company;
(ii) would materially impair the ability of the Company, or any other Person to perform or observe
its obligations under or in respect of the Transaction Documents; or (iii) affects the legality,
validity, binding effect or enforceability of any of the Transaction Documents or the perfection or
priority of any Lien granted to the Investor under any of the Collateral Documents.

     “Obligations” shall mean all obligations of the Company to Holder howsoever created,
arising or evidenced, whether direct or indirect, joint or several, absolute or contingent, or now
or hereafter existing, or due or to become due, which arise out of or in connection with this Note,
the Collateral Documents and each other related document including, without limitation, all costs
and expenses incurred by Holder in connection with the enforcement of this Note or the
Collateral Documents.

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     “Options” shall mean any rights or options to subscribe for or to purchase common
stock or Convertible Securities.

     “Permitted Debt” shall mean the Obligations, trade accounts payable incurred in the
ordinary course which are due no later than 90 calendar days after invoice, other current
liabilities incurred in the ordinary course of business and not incurred through the borrowing of
money or the obtaining of credit, obligations under long-term real property leases incurred in the
ordinary course of business, short-term lease obligations of the Company in an amount per annum not
exceeding $75,000 in the aggregate, Debt incurred to finance the cost of tangible personal property
(which was acquired after the date hereof, and the cost of which, individually or in the aggregate,
does not exceed $75,000), Debt in respect of taxes or other governmental charges which is not yet
due or which is being contested in good faith by appropriate proceedings, and any refinancing,
extension or renewal of any existing Debt permitted hereunder not involving an increase in the
principal amount thereof.

     “Permitted Liens” shall mean, as of any particular time, (a) Liens of taxes,
assessments or other charges of an Governmental Authority not then delinquent or being contested as
provided below, (b) Liens created in favor of the Investor pursuant to the Collateral Documents,
(c) any mechanic’s, worker’s, repairer’s, supplier’s, vendor’s or like Liens securing obligations
arising in the ordinary course of business that (i) are not mature and not overdue, or (ii) both
(x) are being contested in good faith and (y) as to which adequate reserves have been established
on the books of the Company in accordance with GAAP or (z) that do not materially impair the value
of value of the Collateral provided to the Investor pursuant to the Collateral Documents and could
not result in an aggregate liability in excess of $75,000, (d) Liens upon tangible personal
property (which was acquired after the date hereof, and the cost of which, individually or in the
aggregate, does not exceed $75,000) granted by the Company, each of which Liens was created solely
to secure Debt incurred to finance the cost of such property (provided that no such Lien shall
extend to cover any property other than the property so acquired), (e) Liens arising solely by
virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or
similar rights and remedies as to deposit accounts or other funds maintained with a creditor
depository institution, provided that such deposit account is not a dedicated cash
collateral account, and (f) any Liens disclosed in writing to Holder and existing as of the date of
the Initial Closing under the Agreement. A contest referred to in this definition shall be
permitted only if the execution or enforcement of the Lien being contested shall have been stayed
as a result thereof and such contest could not be reasonably be expected to have a Material Adverse
Effect.

     “Person” shall mean an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political subdivision thereof.

     “Subsidiary” shall mean, with respect to any Person (herein referred to as the
“parent”), any corporation, limited liability company, partnership, association or other
business entity (a) of which securities of other ownership interests representing more than 50% of
the equity or more

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than 50% of the ordinary voting power or more than 50% of the general partnership interests are, at
the time any determination is being made, owned, Controlled or held by the parent, or (b) that is,
at any time any determination is made, otherwise Controlled by, the parent or one or more
Subsidiaries of the parent and one or more Subsidiaries of the parent.

     2. Note and Warrant Purchase Agreement. This Note is issued pursuant to the terms of
the Agreement.

     3. Principal; Drawdowns.

     (a) The principal of this Note shall equal the advances made by Holder to the Company from
time to time. On the date of the Initial Closing, the Company shall receive an advance on this
Note of an amount equal to $42,200 (the “Initial Drawdown”). The Company may request
additional drawdown advances (each, an “Additional Drawdown” and, together with the Initial
Drawdown, a “Drawdown”) thereafter on this Note up to a maximum aggregate principal amount
of $211,000 (including the $42,200 drawdown on the date of the Initial Closing). Holder may, in
its sole discretion, determine whether to accept or reject such additional drawdown request from
the Company.

     (b) The Company shall provide Holder at least ten Business Days prior written notice of the
Company’s intention to drawdown any additional advances on this Notice. If Holder accepts such
additional drawdown request, it shall notify the Company in writing of such acceptance within such
ten Business Day period.

     (c) Each drawdown shall be recorded on the grid in Schedule 1 hereto. The Company
hereby authorizes Holder to record on the grid in Schedule 1 hereto all advances,
repayments, prepayment and unpaid principal balance on this Note from time to time to reflect the
drawdown advances made on the date of the Initial Closing and any subsequent drawdown advance.

     4. Maturity. Unless sooner paid, the entire unpaid principal amount and all unpaid
accrued interest shall become fully due and payable on the earliest of (i) September 14, 2009, and
(ii) the acceleration of the maturity of this Note by Holder upon the occurrence of an Event of
Default (such earliest date, the “Maturity Date”).

     5. Payments.

     (a) Form of Payment. All payments of interest and principal shall be in accordance
with Section 20 herein.

     (b) Interest Payments. The Company shall pay to Holder accrued and unpaid interest on
the Maturity Date. Interest at the rate first set forth above shall accrue on any interest which
has not been paid on the date on which it is payable until such time as payment therefor is
actually delivered to Holder.

     (c) Prepayment. The Company shall have the right to prepay any and all amounts owed
under this Note in whole or in part at any time without notice.

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     (d) Collateral Documents. The Company’s obligations hereunder shall be secured
pursuant to the Collateral Documents.

     6. Repayment Upon Maturity. All outstanding Obligations under this Note shall become
immediately due and payable on the Maturity Date.

     7. Repayment Upon Acquisition or Financing. In the event that the Company sells,
conveys, licenses or otherwise disposes of a majority of its assets or is acquired by way of a
merger, consolidation, reorganization or other transaction or series of transactions pursuant to
which stockholders of the Company prior to such acquisition own less than fifty percent (50%) of
the voting interests in the surviving or resulting entity (each, an “Acquisition”), then
all outstanding Obligations under this Note shall, at the option of Holder, become immediately due
and payable upon the closing of the Acquisition, senior in preference to any payment in respect of
any other equity or debt security of the Company. In the event that the Company closes a Debt,
equity or combined Debt or equity financing resulting in gross proceeds or available credit to the
Company of not less than $20,000,000, including the gross proceeds from this Note to the extent
that any amounts owing hereunder are converted into Debt or equity in connection with such
financing (a “Financing”), then all of the remaining outstanding Obligations under this
Note shall, at the option of Holder, become immediately due and payable upon the closing of such
financing.

     8. Affirmative Covenants. So long as any Obligations under this Note remain
outstanding, the Company shall:

     (a) Compliance with Laws. Comply in all material respects with applicable laws,
rules, regulations and orders, such compliance to include, without limitations, paying before the
same become delinquent all taxes, assessments, and charges imposed upon it or upon its property by
any Governmental Authority except for good faith contests for which adequate reserves are being
maintained.

     (b) Information. Deliver to Holder or cause to be delivered to Holder, in form and
detail satisfactory to Holder, the following financial and other information:

          (i) as soon as available but no later than 90 days after and as of the end of each fiscal
year, the Company’s annual audited financial statements, accompanied by an unqualified report
thereon of independent certified public accountants selected by the Company and reasonably
satisfactory to Holder (all such financial statements to be delivered pursuant to this subsection
(b)(i) to be prepared in accordance with GAAP);

          (ii) as soon as available but no later than 30 days after and as of the end of each fiscal
quarter, the Company’s quarterly unaudited financial statements (all such financial statements to
be delivered pursuant to this subsection (b)(ii) to be prepared in accordance with GAAP);

          (iii) concurrently with delivery to the equity investors of the Company, any and all operating
and financial information, or other communications, delivered, from time to time, to such equity
investors;

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          (iv) written notice of any of the following, promptly, and in any event within three (3) days
after the Company becomes aware of any of the following: (i) any proceeding being instituted or
threatened by or against it involving a sum in excess of the Threshold Amount (as defined below) in
the aggregate for all proceedings, (ii) any order, judgment or decree being entered against the
Company or any of its properties or assets involving a sum in excess of the Threshold Amount in the
aggregate for all such orders, judgments and decrees, and (iii) any actual or prospective change,
development or event which has had or could reasonably be expected to have a Material Adverse
Effect; and

          (v) such other statements, lists of property and accounts, budgets, forecasts, projections,
reports, or other information as Holder may from time to time reasonably request.

     (c) Notice of Litigation. Provide to Holder promptly after the commencement thereof,
notice of all actions, suits, and proceedings before any court or Governmental Authority affecting
the Company.

     (d) Notice of Defaults and Events of Defaults. Provide to Holder, as soon as possible
and in any event within three (3) days after the occurrence thereof, with written notice of each
event which either (i) is an Event of Default, or (ii) with the giving of notice or lapse of time
or both would constitute an Event of Default, in each case setting forth the details of such event
and the action which is proposed to be taken by the Company with respect thereto.

     (e) Governmental Approvals. Promptly obtain and maintain any and all authorizations,
consents, approvals, licenses, franchises, concessions, leases, rulings, permits, certifications,
exemptions, filings or registrations by or with any Governmental Authority material and necessary
for the Company to conduct its business and own (or lease) its properties or to execute, deliver
and perform the Transaction Document.

     (f) Insurance. Promptly obtain and maintain in full force and effect at all times
with responsible insurance companies such insurance covering its assets and properties, in such
amounts and against such risks and with such deductibles as an enterprise conducting a similar
business under similar business conditions as the Company would customarily maintain.

     (g) Continuance of Business. Maintain its legal existence, licenses and privileges in
good standing under and in compliance with all applicable laws and continue to operate the business
currently conducted by the Company. Without limiting the generality of the foregoing, the Company
shall do and cause to be done all things necessary to apply for, preserve, maintain and keep in
full force and effect all of its registrations of trademarks, service marks and other marks, trade
names and other trade rights, patents, copyrights and other intellectual property in accordance
with prudent business practices.

     (h) Maintenance. Conduct its business in a manner consistent with relevant industry
standards, keep its material assets and properties in good working order and condition, make all
needful and proper repairs, replacements and improvements thereof, and pay when due all amounts
payable in the course of ordinary operation of the business of the Company (or, in the case of
trade accounts payable, pay such amounts payable in the ordinary course within 90
calendar days after invoice), so that such business may be properly and prudently conducted at
all times.

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     (i) Taxes. Pay and discharge (i) all federal and other material taxes, fees,
assessments and governmental charges or levies imposed upon it or upon its properties or assets
prior to the date on which penalties attach thereto, and all lawful claims for labor, materials and
supplies which, if unpaid, might become a Lien upon any of its properties or assets, except to the
extent such taxes, fees, assessments or governmental charges or levies, or such claims, are being
contested in good faith by appropriate proceedings and are adequately reserved against in
accordance with GAAP; and (ii) all other lawful claims which, if unpaid, would by law become a Lien
upon its property not constituting a Permitted Lien.

     9. Negative Covenants. So long as any Obligations under this Note remain outstanding,
the Company shall not take any of the following actions, unless such action was set forth in the
Company’s operating budget approved by the Company’s Board of Directors on December 17, 2008:

     (a) Liens. Create or suffer to exist any Lien on any assets of the Company except
Permitted Liens.

     (b) Debt. Incur any Debt other than Permitted Debt; prepay, redeem, purchase, defease
or otherwise satisfy in any manner prior to the scheduled repayment thereof any Permitted Debt
(other than amounts due or permitted to be prepaid in respect of the Notes); or amend, modify or
otherwise change the terms of any Permitted Debt (other than the Notes) so as to accelerate the
scheduled repayment thereof.

     (c) Merger. Enter into any consolidation, merger, or other combination, or become a
partner in a partnership, a member of a joint venture, or a member of a limited liability company.

     (d) Sale of Assets. Sell, license, transfer or otherwise dispose of any interest in
any of the Company’s assets except as provided for under the Security Agreement.

     (e) Acquisitions and Investments. Acquire or commit or agree to acquire all or any
stock, securities or assets of any other Person, other than inventory and equipment acquired in the
ordinary course of business, or make any loans to or other investments in any other Person, other
than in the ordinary course of business.

     (f) Distributions. Declare or pay any dividends or make any distribution of any kind
on the Company’s capital stock, or purchase, redeem or otherwise acquire, directly or indirectly,
any shares of the Company’s capital stock, any Options, any Convertible Securities or other rights
to acquire shares of capital stock of the Company, except for the repurchase of such securities
from former employees of or consultants to the Company at the original issue price paid therefor
pursuant to contractual rights of the Company upon the termination of such employees’ or
consultants’ employment by or provision of service to the Company.

     (g) Additional Issuances. Issue, designate or authorize the issuance of any shares of
capital stock of the Company or any security or other instrument convertible into capital stock of
the Company; permit any such issuance, designation, or authorization of issuance with respect to
any subsidiary of the Company; or form any Subsidiary.

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     (h) Changes in Business. Enter into or engage in any business other than that carried
on (or contemplated to be carried on) as of the date of the Initial Closing.

     (i) Operating Leases. The Company shall not make any expenditures in respect of
operating leases, except for: (i) operating leases between the Company and any of its wholly owned
Subsidiaries or between any of its wholly owned Subsidiaries; and (ii) operating leases entered
into or assumed by the Company in the ordinary course of business.

     (j) Capital Expenditures. The Company shall not make or become legally obligated to
make any expenditure in respect of the purchase or other acquisition of any fixed or capital asset
(including obligations under any capital lease), but excluding any expenditures in respect of any
normal replacements and maintenance which are properly charged to current operations), except for
capital expenditures in the ordinary course of business not exceeding $75,000, on a consolidated
basis, in any fiscal year.

     (k) Subsidiaries. Cause or permit any direct or indirect Subsidiary of the Company to
(i) acquire or hold any material assets or (ii) engage in any business activities, except (in
either case) without the prior written approval of Holder.

     10. Use of Proceeds. The Company shall use the proceeds from this Note for general
corporate purposes, excluding any payment of dividends, repurchase of capital stock or repayment of
Debt of the Company or of any subsidiary of the Company (other than as provided herein or in any
other Transaction Document, and other than Permitted Debt).

     11. Default.

     (a) Events of Default. For purposes of this Note, any of the following events which
shall occur shall constitute an “Event of Default”:

          (i) any Obligation under this Note is not paid when and as the same shall become due and
payable, whether at maturity, by acceleration, or otherwise;

          (ii) default shall occur in the observance or performance of (A) any covenant, obligation or
agreement of the Company contained in Sections 9 or 10, or (B) any other provision of this Note,
the Agreement or any of the Collateral Documents and any such default shall continue uncured for a
period of five (5) days after the Company knew or should have known, exercising reasonable
diligence, of the event or circumstances giving rise to such default; or any “Event of
Default” shall exist under any Collateral Document;

          (iii) any representation, warranty or certification made by the Company herein or in the
Agreement or the Collateral Documents or in any certificate, report, document, agreement or
instrument delivered pursuant to any provision hereof or thereof shall prove to have been false or
incorrect in any material respect on the date or dates as of which made (any such falsity being a
“Representation Default”) and, to the extent the event or circumstances giving rise to such
Representation Default is amenable to being cured such that the Representation Default

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would no longer exist, such Representation Default shall continue uncured for a period of five (5)
days after the Company knew or should have known, exercising reasonable diligence, of the event or
circumstances giving rise to such Representation Default;

          (iv) the Company shall (A) apply for or consent to the appointment of a receiver, trustee,
custodian or liquidator of itself or any part of its property, (B) become subject to the
appointment of a receiver, trustee, custodian or liquidator for itself or any part of its property
if such appointment is not terminated or dismissed within thirty (30) days, (C) make an assignment
for the benefit of creditors, (D) fail generally or admit in writing to its inability to pay its
debts as they become due, (E) institute any proceedings under the United States Bankruptcy Code or
any other federal or state bankruptcy, reorganization, receivership, insolvency or other similar
law affecting the rights of creditors generally, or file a petition or answer seeking
reorganization or an arrangement with creditors to take advantage of any insolvency law, or file an
answer admitting the material allegations of a bankruptcy, reorganization or insolvency petition
filed against it, or (F) become subject to any involuntary proceedings under the United States
Bankruptcy Code or any other federal or state bankruptcy, reorganization, receivership, insolvency
or other similar law affecting the rights of creditors generally, which proceeding is not dismissed
within thirty (30) days of filing, or have an order for relief entered against it in any proceeding
under the United States Bankruptcy Code;

          (v) the Company shall (i) liquidate, wind up or dissolve (or suffer any liquidation, wind-up
or dissolution), (ii) suspend its operations other than in the ordinary course of business, or
(iii) take any action to authorize any of the actions or events set forth above in this Section
11(a)(v);

          (vi) any final judgment or judgments for the payment of money aggregating in excess of $75,000
(the “Threshold Amount”) shall be rendered against the Company which judgments are not,
within 30 days after the entry thereof, bonded, discharged or stayed pending appeal, or are not
discharged within 30 days after the expiration of such stay;

          (vii) (A) any Debt of the Company (other than the Notes and trade payables) shall not be paid
at its stated maturity or shall be duly declared to be or shall become due and payable prior to the
stated maturity thereof, or (B) there shall occur and be continuing any default or event of default
under any agreement or instrument relating to any such Debt (other than trade payables), or (C) the
holder or holders of such Debt, or any trustee, agent or other representative on behalf of such
holder or holders, shall have demanded or required, pursuant to the terms of any agreement or
instrument relating to such Debt (other than trade payables), that the Company redeem, repurchase
or otherwise acquire or retire such Debt for value at any time prior to its stated maturity;

          (viii) there shall fail, at any time, to be sufficient authorized shares of Common Stock of
the Company to permit the issuance of that number of shares of Common Stock for which all of the
Warrants are exercisable (assuming full vesting thereof); or

          (ix) the occurrence or existence of any event or condition that, in Holder’s reasonable
judgment, would have or could result in a Material Adverse Effect.

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     (b) Consequences
of Events of Default.

          (i) If any Event of Default shall occur for any reason, whether voluntary or involuntary, and
be continuing, Holder may, upon notice or demand, declare the outstanding Obligations under this
Note to be due and payable, whereupon the outstanding Obligations under this Note shall be and
become immediately due and payable, and the Company shall immediately pay to Holder all such
Obligations. Upon the occurrence of an actual or deemed entry of an order for relief with respect
to the Company under the United States Bankruptcy Code, then all Obligations under this Note shall
automatically be due immediately without notice of any kind. The Company agrees to pay Holder all
reasonable out-of-pocket costs and expenses incurred by Holder in any effort to collect Obligations
under this Note, including attorneys’ fees, and to pay interest at the lesser of (A) Post-Default
Rate hereunder and (B) the highest rate permitted by applicable law, on such costs and expenses to
the extent not paid when demanded.

          (ii) Holder shall also have any other rights which Holder may have been afforded under any
contract or agreement at any time and any other rights which Holder may have pursuant to applicable
law. Holder may exercise any and all of its remedies under the Collateral Documents and the other
Transaction Documents contemporaneously or separately from the exercise of any other remedies
hereunder or under applicable law.

     12. Lost, Stolen, Destroyed or Mutilated Notes. In case any Note shall be mutilated,
lost, stolen or destroyed, the Company shall issue a new Note of like date, tenor and denomination
and deliver the same in exchange and substitution for and upon surrender and cancellation of any
mutilated Note, or in lieu of any Note lost, stolen or destroyed, upon receipt of evidence
satisfactory to the Company of the loss, theft or destruction of such Note.

     13. Transferability of Note; Agent.

     (a) Subject to compliance with applicable federal and state securities laws and the transfer
restrictions set forth in Section 3.6 of the Agreement under which this Note was issued,
this Note and all rights hereunder may be transferred, in whole or in part, without charge to
Holder hereof (except for transfer taxes), upon surrender of this Note properly endorsed and in
compliance with the provisions of the Agreement. Each taker and holder of this Note, by taking or
holding the same, consents and agrees that this Note, when endorsed in blank, shall be deemed
negotiable, and that the holder hereof, when this Note shall have been so endorsed, may be treated
by the Company, at the Company’s option, and all other persons dealing with this Note as the
absolute owner hereof for any purpose and as the person entitled to exercise the rights represented
by this Note, or to the transfer hereof on the books of the Company and notice to the contrary
notwithstanding; but until such transfer on such books, the Company may treat the registered owner
hereof as the owner for all purposes. Upon any such transfer, a new Note, in substantially the
form of this Note (the “New Note”), evidencing the portion of this Note so transferred,
shall be issued to the transferee and a New Note evidencing the remaining portion of this Note not
so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Note
by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights
and obligations of a holder of a Note.

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     (b) As a condition to any transfer of this Note, the original Holder of this Note, the
proposed transferee of this Note, and the Company shall enter into an agency agreement in a form
mutually agreeable to the parties thereto, which provides for the appointment of, and duties and
responsibilities of, the original Holder of this Note as agent, and which shall provide that
observance of any term of this Note and all Notes issued pursuant to the Agreement or pursuant to
any transferee may be waived (either generally or in a particular instance and either retroactively
or prospectively) with holders representing at least a majority of the aggregate principal amount
of the Notes issued by the Company at such time.

     14. Governing Law. This Note is to be construed in accordance with and governed by
the laws of the State of California.

     15. Amendment and Waiver. Any term of this Note may be amended only with the written
consent of the Company and Holder. The observance of any term of this Note may be waived (either
generally or in a particular instance and either retroactively or prospectively) only with the
written consent of persons then holding at least a majority of the aggregate principal amount of
the Note.

     16. Notices. Except as may be otherwise provided herein, all notices, requests,
waivers and other communications made pursuant to this Note shall be made in accordance with
Section 5.6 of the Agreement.

     17. Severability. If one or more provisions of this Note are held to be unenforceable
under applicable law, such provision shall be excluded from this Note and the balance of the Note
shall be interpreted as if such provision were so excluded and shall be enforceable in accordance
with its terms.

     18. Assignment. The Company shall not have the right to assign its rights and
obligations hereunder or any interest herein.

     19. Remedies Cumulative; Failure or Indulgence Not a Waiver. The remedies provided in
this Note shall be cumulative and in addition to all other remedies available under this Note and
any of the other Transaction Documents. No failure or delay on the part of Holder in the exercise
of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power, right or privilege preclude other or further exercise
thereof or of any other right, power or privilege.

     20. Payments. Whenever any payment of cash is to be made by the Company to any Person
pursuant to this Note, such payment shall be made in lawful money of the United States of America
by a check drawn on the account of the Company and sent via overnight courier service to such
Person at such address as previously provided to the Company in writing (which address, in the case
of Holder as of the date of issuance hereof, shall initially be the address for Holder as set forth
in the Agreement); provided that Holder may elect to receive a payment of cash via wire transfer of
immediately available funds by providing the Company with prior written notice setting out such
request and Holder’s wire transfer instructions. Whenever any payment to be made shall otherwise
be due on a day which is not a Business Day, such payment
shall be made on the immediately succeeding Business Day and such extension of time shall be
included in the computation of accrued interest.

11

 

     21. Excessive Interest. Notwithstanding any other provision herein to the contrary,
this Note is hereby expressly limited so that the interest rate charged hereunder shall at no time
exceed the maximum rate permitted by applicable law. If, for any circumstance whatsoever, the
interest rate charged exceeds the maximum rate permitted by applicable law, the interest rate shall
be reduced to the maximum rate permitted, and if Holder shall have received an amount that would
cause the interest rate charged to be in excess of the maximum rate permitted, such amount that
would be excessive interest shall be applied to the reduction of the principal amount owing
hereunder (without charge for prepayment) and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal, such excess shall be refunded to the Company.

     22. Waiver of Notice. To the extent permitted by law, the Company hereby waives
demand, notice, protest and all other demands and notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note and the Transaction Documents.

12

 

     IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by its officers,
thereunto duly authorized as of the date first above written.

	 	 	 	 	 
	 	VIA PHARMACEUTICALS, INC.

 	 
	 	By:  	
/s/ Lawrence K. Cohen	 
	 	 	Name:  	Lawrence K. Cohen	 
	 	 	Title:  	President
and Chief Executive Officer	 
	 

[Signature page to Note for BCC Co-Investment Fund]

13

 

SCHEDULE 1

Outstanding Note Balance for Note issued to

Bay City Capital Fund IV Co-Investment Fund, L.P.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Date	 	Drawdown	 	Prepayment	 	Unpaid Principal	 	Accrued Interest	 	Outstanding Balance
	3/12/09
	 	$	42,200	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	42,200exv10w1

Exhibit 10.1

Asset Purchase Agreement

among

Local.com Corporation as Buyer, 

LiveDeal, Inc. as Parent

And

Telco Billing, Inc. as Seller

March 9, 2009

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 
	 	 	 	 
	ARTICLE 1 DEFINITIONS	 	 	1	 
	 	1.1	 	 	Defined Terms
	 	 	1	 
	 	1.2	 	 	List of Additional Definitions
	 	 	3	 
	 	1.3	 	 	Rules of Construction
	 	 	4	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 2 PURCHASE AND SALE	 	 	5	 
	 	2.1	 	 	Purchase and Sale of Assets
	 	 	5	 
	 	2.2	 	 	Assumed Obligations and Liabilities; Retained Liabilities
	 	 	5	 
	 	2.3	 	 	Purchase Price; Final Format Data; TPV Recordings; Purchase Price Adjustement
	 	 	5	 
	 	2.4	 	 	Seller Escrow Fund
	 	 	6	 
	 	2.5	 	 	Buyer Escrow Fund
	 	 	7	 
	 	2.6	 	 	Credits Processed by LECs or Clearinghouses
	 	 	7	 
	 	2.7	 	 	Assignability and Consents
	 	 	8	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 3 PARENT’S AND SELLER’S REPRESENTATIONS AND WARRANTIES	 	 	8	 
	 	3.1	 	 	Organization of Seller
	 	 	9	 
	 	3.2	 	 	Authority
	 	 	9	 
	 	3.3	 	 	No Conflict; Required Consents
	 	 	9	 
	 	3.4	 	 	Subscribers
	 	 	9	 
	 	3.5	 	 	Litigation
	 	 	9	 
	 	3.6	 	 	Taxes
	 	 	9	 
	 	3.7	 	 	Billing Statements
	 	 	10	 
	 	3.8	 	 	No Material Adverse Change
	 	 	10	 
	 	3.9	 	 	No Undisclosed Liabilities
	 	 	10	 
	 	3.10	 	 	Compliance with Legal Requirements
	 	 	10	 
	 	3.11	 	 	Books and Records
	 	 	10	 
	 	3.12	 	 	Terms and Conditions
	 	 	10	 
	 	3.13	 	 	Finders and Brokers
	 	 	10	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 4 BUYER’S REPRESENTATIONS AND WARRANTIES	 	 	11	 
	 	4.1	 	 	Organization and Qualification of Buyer
	 	 	11	 
	 	4.2	 	 	Authority
	 	 	11	 
	 	4.3	 	 	No Conflict; Required Consents
	 	 	11	 
	 	4.4	 	 	Finders and Brokers
	 	 	11	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 5 COVENANTS	 	 	11	 
	 	5.1	 	 	Transfer Taxes
	 	 	11	 
	 	5.2	 	 	Data Transfer Procedures
	 	 	11	 
	 	5.3	 	 	Confidentiality
	 	 	11	 
	 	5.4	 	 	Nonsolicitation
	 	 	12	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 6 CLOSING	 	 	12	 
	 	6.1	 	 	Closing
	 	 	12	 
	 	6.2	 	 	Seller’s Obligations
	 	 	12	 

-i-

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	6.3	 	 	Buyer’s Obligations
	 	 	13	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 7 INDEMNIFICATION	 	 	14	 
	 	7.1	 	 	Indemnification by Parent and Seller
	 	 	14	 
	 	7.2	 	 	Indemnification by Buyer
	 	 	14	 
	 	7.3	 	 	Indemnification Procedure
	 	 	15	 
	 	7.4	 	 	Third-Party Claims
	 	 	16	 
	 	7.5	 	 	Survival of Representations and Warranties
	 	 	17	 
	 	7.6	 	 	Indemnification Limitations
	 	 	17	 
	 	7.7	 	 	Net of Insurance Recoveries
	 	 	18	 
	 	7.8	 	 	No Consequential Damages
	 	 	18	 
	 	7.9	 	 	Sole and Exclusive Remedy
	 	 	18	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 8 MISCELLANEOUS PROVISIONS	 	 	18	 
	 	8.1	 	 	Expenses
	 	 	18	 
	 	8.2	 	 	Waivers
	 	 	19	 
	 	8.3	 	 	Notices
	 	 	19	 
	 	8.4	 	 	Publicity
	 	 	20	 
	 	8.5	 	 	Binding Effect; Benefits
	 	 	20	 
	 	8.6	 	 	Entire Agreement; Amendments
	 	 	20	 
	 	8.7	 	 	Governing Law
	 	 	20	 
	 	8.8	 	 	Counterparts
	 	 	20	 
	 	8.9	 	 	Further Assurances
	 	 	20	 
	 	8.10	 	 	Attorneys’ Fees
	 	 	20	 
	 	8.11	 	 	Schedules and Exhibits; Headings
	 	 	20	 
	 	8.12	 	 	Remedies Cumulative
	 	 	21	 

-ii-

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 	 	 	 	 

List of Exhibits and Schedules

	 	 	 
	Exhibits	 	 
	 
	 	 
	Exhibit A

	 	Purchased Subscribers
	Exhibit B

	 	Seller Fund Escrow Agreement
	Exhibit C

	 	Buyer Fund Escrow Agreement
	Exhibit D

	 	Bill of Sale
	Exhibit E

	 	Assignment and Assumption Agreement
	Schedule 2.3(a)(i)

	 	LiveDeal Wiring Instructions
	Schedule 2.3(b)

	 	Final Data Format
	Schedule 2.7

	 	Required Consents
	Schedule 3.3

	 	No conflict; Required Consents
	Schedule 3.4

	 	Subscriber Attributes
	Schedule 3.5

	 	Litigation
	Schedule 3.10

	 	Compliance with Legal Requirements
	Schedule 3.12

	 	Terms and Conditions
	Schedule 5.2

	 	Customer and Data Transfer Procedures

-iii-

 

ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of March
9, 2009 by and between Local.com Corporation, a Delaware corporation (“Buyer”), LiveDeal,
Inc., a Nevada corporation (“Parent”), and Telco Billing, Inc., a Nevada corporation
(“Seller”). Each of Buyer, Parent and Seller is a “Party,” and collectively,
“Parties.”

RECITALS

     A. Seller is in the business (the “Business”) of providing online classifieds and
online yellow pages to advertisers (“Subscribers”).

     B. Seller desires to sell, and Buyer desires to purchase, certain Subscribers of Seller set
forth in Exhibit A attached hereto (the “Purchased Subscribers”).

     C. Seller and Buyer previously entered into that certain Escrow Agreement (the “Breakup
Escrow Agreement”) dated January 30, 2009, pursuant to which Buyer deposited $250,000.00 (the
“Breakup Escrow Fund”) into escrow as either (i) a breakup fee if the Parties failed to
consummate the contemplated transaction under certain circumstances, or (ii) as a portion of the
purchase price in the event the Parties successfully consummated the contemplated transactions.

AGREEMENT

     In consideration of the mutual covenants and promises set forth herein, Buyer and Seller agree
as follow:

ARTICLE 1

DEFINITIONS

     1.1 Defined Terms. Unless otherwise expressly provided in this Agreement, the
following terms, whether in singular or plural form, shall have the following meanings:

     “Affiliate” means, with respect to any Person, any other Person controlled by or under
common control with such Person, with “control” for such purpose meaning 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 or voting interests, by contract or
otherwise.

     “Consents” means all of the consents, permits or approvals of third parties (excluding
the Purchased Subscribers themselves) necessary to transfer the Purchased Subscribers to Buyer (or,
at Buyer’s request, to an affiliate of Buyer) or otherwise to consummate lawfully the transactions
contemplated hereby.

     “Contracts” means all subscriber agreements and other agreements, written or oral
(including any amendments and other modifications thereto) to which Seller is a party and that
affect the Purchased Subscribers.

-1-

 

     “Governmental Authority” means the United States of America, any state, commonwealth,
territory, or possession thereof and any political subdivision or quasi-governmental authority of
any of the same.

     “Judgment” means any judgment, writ, order, injunction, award or decree of any court,
judge, justice or magistrate, including any bankruptcy court or judge, and any order of or by any
Governmental Authority.

     “Knowledge”: an individual will be deemed to have “Knowledge” of a particular
fact or other matter if:

          (a) such individual is actually aware of such fact or other matter; or

          (b) a prudent individual could be expected to discover or otherwise become aware of
such fact or other matter in the course of conducting a reasonably comprehensive
investigation concerning the existence of such fact or other matter.

     A Person (other than an individual) will be deemed to have “Knowledge” of a particular
fact or other matter if any individual who is serving, or who has at any time served, as a
director, officer, partner, executor, or trustee of such Person (or in any similar capacity) has,
or at any time had, Knowledge of such fact or other matter.

     “Legal Requirements” means applicable common law and any statute, ordinance, code or
other law, rule, regulation, order, technical or other standard, requirement or procedure enacted,
adopted, promulgated, applied or followed by any Governmental Authority, including Judgments.

     “Licenses” means all authorizations and permits relating to the Purchased Subscribers
granted to Seller by any Governmental Authority.

     “Lien” means any security agreement, financing statement filed with any Governmental
Authority, conditional sale or other title retention agreement, any lease, consignment or bailment
given for purposes of security, any lien, mortgage, indenture, pledge, option, encumbrance, adverse
interest, constructive trust or other trust, claim, attachment, exception to or defect in title or
other ownership interest of any kind, which otherwise constitutes an interest in or claim against
property, whether arising pursuant to any Legal Requirement, Contract or otherwise but which shall
not include any rights to payment or obligations imposed upon Buyer as a result of this Agreement
or any ancillary documents.

     “Litigation” means any claim, action, suit, proceeding, arbitration, investigation,
hearing or other activity or procedure that could result in a Judgment, and any notice of any of
the foregoing.

     “Losses” means, on a dollar-for-dollar basis, any claims, losses, liabilities,
damages, Liens, penalties, costs, and expenses, including but not limited to interest which may be
imposed in connection therewith, expenses of investigation, reasonable fees and disbursements of
counsel

2

 

and other experts, and the cost to any Person making a claim or seeking indemnification under
this Agreement with respect to funds expended by such Person by reason of the occurrence of any
event with respect to which indemnification is sought, but in no event shall “Losses” include
incidental or consequential damages.

     “Material Adverse Change” means, with respect to Seller, an event that would either
individually or in the aggregate, reasonably be expected to have a material adverse change on the
Business or the Purchased Subscribers, or the results of operations or financial condition of the
Business or the Purchased Subscribers sold hereunder, other than any change or condition relating
to the economy in general, or the industries in which Seller operates in general, and not
specifically relating to Seller.

     “Organizational Documents” shall mean (a) the articles or certificate of incorporation
and the bylaws of a corporation; (b) the partnership agreement and any statement of partnership of
a general partnership; (c) the limited partnership agreement and the certificate of limited
partnership of a limited partnership; (d) the operating agreement and the certificate of formation
of a limited liability company; (e) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (f) any amendment to any of the
foregoing.

     “Person” means any natural person, Governmental Authority, corporation, general or
limited partnership, limited liability company, joint venture, trust, association or unincorporated
entity of any kind.

     “Taxes” means all levies and assessments of any kind or nature imposed by any
Governmental Authority, together with any interest thereon and any penalties, additions to tax or
additional amounts applicable thereto.

     “Transaction Documents” means all instruments and documents executed and delivered by
Buyer, Seller, or any officer, director or Affiliate of either of them, in connection with this
Agreement.

     1.2 List of Additional Definitions. The following is a list of additional terms used
in this Agreement and a reference to the Section hereof in which such term is defined:

	 	 	 	 	 
	Term	 	Section
	 
	 	 	 	 
	Agreement

	 	Preamble

	Assets

	 	2.1	 
	Assignment and Assumption Agreement

	 	6.2(b)	
	Assumed Obligations and Liabilities

	 	2.2	 
	Basket

	 	7.6	 
	Billing Statements

	 	3.7	 
	Business

	 	Recitals

	Breakup Escrow Agreement

	 	Recitals

	Breakup Escrow Fund

	 	Recitals

3

 

	 	 	 	 	 
	Term	 	Section
	 
	 	 	 	 
	Buyer

	 	Preamble

	Buyer Escrow Deposit

	 	2.5	 
	Buyer Fund Escrow Agreement

	 	2.5	 
	Buyer Fund Escrow Termination Date

	 	2.5	 
	Buyer Indemnitees

	 	7.1	 
	Cap

	 	7.6	 
	Claim Notice

	 	7.3(a)	
	Closing

	 	6.1	 
	Closing Date

	 	6.1	 
	Confidential Information

	 	5.3	 
	Covenant Period

	 	5.4	 
	Escrow Agent

	 	2.4	 
	Final Format Data

	 	2.3(b)	
	Indemnified Party

	 	7.3(a)	
	Indemnifying Party

	 	7.3(a)	
	Nonassignable Items

	 	2.6(b)	
	Parent

	 	Preamble

	Party

	 	Preamble

	Purchase Price

	 	2.3(a)	
	Purchased Subscribers

	 	Recitals

	Retained Liabilities

	 	2.2	 
	Seller

	 	Preamble

	Seller Escrow Deposit

	 	2.4	 
	Seller Fund Escrow Agreement

	 	2.4	 
	Seller Indemnitees

	 	7.2	 
	Subscribers

	 	Recitals

	Third Party Claim Notice

	 	7.4(b)	
	TPV Recordings

	 	2.3(c)	

     1.3 Rules of Construction. Unless otherwise expressly provided in this Agreement, (i)
words used in this Agreement, regardless of the gender used, shall be deemed and construed to
include any other gender, masculine, feminine, or neuter, as the context requires; (ii) the word
“including” is not limiting, and the word “or” is not exclusive; (iii) the capitalized term
“Section” refers to sections of this Agreement; (iv) references to a particular Section include all
subsections thereof, (v) references to a particular statute or regulation include all amendments
thereto, rules and regulations thereunder and any successor statute, rule or regulation, or
published clarifications or interpretations with respect thereto, in each case as from time to time
in effect; (vi) references to a Person include such Person’s successors and assigns to the extent
not prohibited by this Agreement; and (vii) references to a “day” or number of “days” shall be
interpreted as a reference to a calendar day or number of calendar days.

4

 

ARTICLE 2

PURCHASE AND SALE

     2.1 Purchase and Sale of Assets. Subject to the terms and conditions set forth in
this Agreement, at Closing, Seller shall transfer to Buyer, and Buyer shall acquire from Seller,
free and clear of all Liens, the following described assets and properties, tangible and
intangible, used by or useful to Seller in its operation of, or otherwise relating to, the
Purchased Subscribers (the “Assets”):

     (a) subject to Section 2.7, all rights, benefits and interests of Seller in,
under or pursuant to all Contracts (provided that all receivables and revenues related to or
generated from billings related to services provided by Parent or Seller prior to the
Closing shall not be deemed an Asset and shall be retained by Seller), including all
revisions or amendments thereto, and Licenses;

     (b) the customer database and history related to each Purchased Subscriber, including
without limitation any and all data, indexes and content contained in such database, and any
copyrights thereto; and

     (c) all books and records relating to the Purchased Subscribers, subject to the right
of Seller to have such books and records made available to Seller for a reasonable period,
not to exceed three years from the Closing Date.

     2.2 Assumed Obligations and Liabilities; Retained Liabilities. After the Closing,
Buyer shall assume, pay, discharge, and perform all obligations and liabilities arising after the
Closing that are related to the Assets or arise from or under (i) Buyer’s or its Affiliates’ use of
the Assets or provision of services to the Purchased Subscribers, or (ii) the Contracts
(collectively, the “Assumed Obligations and Liabilities”). All obligations and liabilities
arising out of or relating to the Assets other than the Assumed Obligations and Liabilities shall
remain and be the obligations and liabilities solely of Seller (collectively, the “Retained
Liabilities”).

     2.3 Purchase Price; Final Format Data; TPV Recordings; Purchase Price Adjustment.

     (a) Purchase Price. Buyer shall pay to Parent $3,092,330 (the “Purchase
Price”), which amount is based upon the transfer of 14,185 Purchased Subscribers
(comprised of approximately 3,000 current Subscribers (billed in the same month) and
approximately 11,185 previous Subscribers (billed in arrears)). The Purchase Price is
payable as set forth below.

     (i) At the Closing, Buyer shall pay to Seller by wire transfer to the account
and pursuant to the instructions set forth on Schedule 2.3(a)(i) an amount
equal to (i) the Purchase Price minus (ii) the Breakup Escrow Fund minus (iii) the
Seller Escrow Deposit.

5

 

     (ii) At the Closing, Buyer shall release the Breakup Escrow Fund to Parent by
issuing a joint written instruction with Parent instructing the escrow agent under
the Breakup Escrow Agreement to release the Breakup Escrow Fund to Parent.

     (iii) At the Closing, Buyer shall deposit the Seller Escrow Deposit with Escrow
Agent pursuant to Section 2.4.

     (b) Final Format Data. At the Closing, Buyer shall provide to Seller data
relating to at least 12,909 Purchased Subscribers in final format as set forth in
Exhibit 2.3(b) (the “Final Format Data”).

     (c) TPV Recordings. On or before the date 7 days after the Closing, Seller
shall provide to Buyer a copy of all third-party-verification recordings (“TPV
Recordings”) for each of the Purchased Subscribers. If TPV Recordings are not available
for Purchased Subscribers billed prior to the Closing via BSG Clearing Solutions
clearinghouse, such Purchased Subscribers shall not be acquired by Buyer and the Purchase
Price shall be adjusted pursuant to Section 2.3(d). If TPV Recordings are stored at
a third party location, Seller shall provide Buyer with access to the third party location
for a period of twelve months after the Closing.

     (d) Purchase Price Adjustment. Promptly after the Closing, Buyer and Seller
shall mutually determine the actual number of Purchased Subscribers transferred to Buyer.
If the number of Purchased Subscribers transferred to Buyer is less than 14,343, then Seller
shall deliver a written instruction to Escrow Agent within five business days of Closing
instructing Escrow Agent to release to Buyer from the Seller Escrow Deposit an amount equal
to $218.00 per Purchased Subscriber for the deficiency and the Purchase Price shall be
reduced accordingly. For purposes of determining the number of Purchased Subscribers
transferred to Buyer for this Section 2.3(d), a Purchased Subscriber shall be deemed
to have been transferred to Buyer only if (i) such Purchased Subscriber was billed by Seller
in the most recent month prior to the Closing and Seller was not aware of anything which
would reasonably lead Seller to believe that the amount billed to such Purchased Subscriber
on such bill was uncollectible and (ii) Seller has not received a written or telephonic
notice from or on behalf of such Purchased Subscriber indicating that such Purchased
Subscriber intends to cancel or has cancelled.

     2.4 Seller Escrow Fund. At the Closing, Buyer shall deposit $309,233 (the “Seller
Escrow Deposit”) into an escrow account with Alliance Bank of Arizona (the “Escrow
Agent”) under an Escrow Agreement in the form attached hereto as Exhibit B executed and
delivered by Seller, Parent, Buyer and Escrow Agent (the “Seller Fund Escrow Agreement”).
Seller and Buyer shall each pay one-half of the fees and expenses of the Escrow Agent in connection
with the administration of the Seller Fund Escrow Agreement. Buyer shall be entitled to seek
indemnification for any Losses for which it is entitled to be indemnified pursuant to Section
7.1 by making a claim to Escrow Agent, as evidenced by joint instructions to be given by Buyer
and Parent in accordance with the Seller Fund Escrow Agreement, for payment from the Seller Escrow
Deposit. On the date nine months after the Closing Date, Parent and Buyer shall jointly

6

 

instruct the Escrow Agent to disburse to Seller the entire Seller Escrow Deposit, plus any
accrued interest, less (a) any amounts disbursed by Escrow Agent in payment of claims made by Buyer
and (b) any amounts subject to claims made by Buyer but not disbursed by Escrow Agent (which
amounts shall continue to be held by Escrow Agent until disbursed in accordance with the terms of
the Seller Fund Escrow Agreement). The Seller Escrow Deposit shall not constitute the limit of
Seller’s liability to Buyer, and Buyer shall retain all indemnification rights and remedies
pursuant to Article 7 in this Agreement.

     2.5 Buyer Escrow Fund. At the Closing, Buyer shall deposit $50,000 into an escrow
account (the “Buyer Escrow Deposit”) with the Escrow Agent under an Escrow Agreement in the
form attached hereto as Exhibit C executed and delivered by Seller, Parent, Buyer and
Escrow Agent at the Closing (the “Buyer Fund Escrow Agreement”). Seller and Buyer shall
each pay one-half of the fees and expenses of the Escrow Agent in connection with the
administration of the Buyer Fund Escrow Agreement. Seller shall be entitled to seek
indemnification for any Losses for which it is entitled to be indemnified pursuant to Section
7.2 by making a claim to Escrow Agent, as evidenced by joint instructions to be given by Buyer
and Parent in accordance with the Buyer Fund Escrow Agreement, for payment from the Buyer Escrow
Deposit. On the date 120 days after the Closing Date (the “Buyer Fund Escrow Termination
Date”), Parent and Buyer shall jointly instruct the Escrow Agent to disburse to Buyer the
entire Buyer Escrow Deposit, plus any accrued interest, less (a) any amounts disbursed by Escrow
Agent in payment of claims made by Parent or Seller and (b) any amounts subject to claims made by
Parent or Seller but not disbursed by Escrow Agent (which amounts shall continue to be held by
Escrow Agent until disbursed in accordance with the terms of the Buyer Fund Escrow Agreement). The
Buyer Escrow Deposit shall not constitute the limit of Buyer’s liability to Parent and Seller, and
Parent and Seller shall retain all indemnification rights and remedies pursuant to Article
7 in this Agreement.

     2.6 Credits Processed by LECs or Clearinghouses.

     (a) Credits processed by LECs or clearinghouses shall be the responsibility of the
Party who submitted the original billing to the LEC or clearinghouse, as applicable.

     (i) During the period from the Closing until the Buyer Fund Escrow Termination
Date, on the last day of each calendar month and on the Buyer Fund Escrow
Termination Date, Buyer will provide to Seller a report listing all credits
processed in error against Buyer’s settlements or as an adjustment to reserves by
LECs or clearinghouses, as applicable, and the total amount owed to Buyer by Seller.
Buyer and Seller shall then promptly jointly instruct the Escrow Agent to disburse
to Buyer such amount from the Seller Escrow Deposit. Following the Buyer Fund
Escrow Termination Date, Buyer cannot make any claim against Seller for credits
processed in error related to Purchased Subscribers.

     (ii) During the period from the Closing until the Buyer Fund Escrow Termination
Date, on the last day of each calendar month and on the Buyer Fund
Escrow Termination Date, Seller will provide to Buyer a report listing all
credits processed in error against Seller’s settlements or as an adjustment to
reserves by

7

 

LECs or clearinghouses, as applicable, and the total amount owed to Seller by
Buyer. Buyer and Seller shall then promptly jointly instruct the Escrow Agent to
disburse to Seller such amount from the Buyer Escrow Deposit. Following the Buyer
Fund Escrow Termination Date, Seller cannot make any claim against Buyer for credits
processed in error related to Purchased Subscribers.

     (b) If Buyer or its Affiliates receives a refund request from a Purchased Subscriber
related to services provided by Seller prior to Closing, Buyer shall only transfer such
Purchased Subscriber to Seller at phone number for the aggregator for that customer set
forth in Schedule 2.6(b) and make no commitment regarding issuing a refund. Buyer
and its Affiliates shall not make any other statement or suggestion to such Purchased
Subscriber.

     2.7 Assignability and Consents.

     (a) Required Consents. Schedule 2.7 sets forth a list of all Contracts
and Licenses which are non-assignable or non-transferable to Buyer without the consent of
some other Person. Seller has taken or caused to be taken by others, all commercially
reasonable actions to obtain or satisfy all Consents from any Persons necessary to
authorize, approve or permit the full and complete sale, conveyance, assignment or transfer
of the Assets; provided, however, that neither Parent nor Seller has undertaken nor is
either responsible for notifying the Purchased Subscribers of the transfer of their accounts
nor is either providing any assurance that the Purchased subscribers will not terminate or
request a cancellation of their Contract.

     (b) Nonassignable Items. Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement to sell, convey, assign,
sublease or transfer any Assets, including Contracts and Licenses, if an attempted sale,
conveyance, assignment, or transfer thereof, without the consent of another Person, would
constitute a breach of, or in any way affect the rights of either Seller or Buyer with
respect to, such Assets (“Nonassignable Items”). Seller shall use reasonable efforts
(and Buyer shall cooperate in all reasonable respects with Seller) to obtain and satisfy all
Consents and to resolve all impracticalities of sale, conveyance, assignment, or transfer
necessary to convey to Buyer all Nonassignable Items. If any such Consents are not obtained
and satisfied or if an attempted sale, conveyance, assignment, or transfer would be
ineffective, Seller shall enter into such arrangements (including related written
agreements) as Buyer may reasonably request to provide Buyer with the benefit of the
Nonassignable Items.

ARTICLE 3

PARENT’S AND SELLER’S REPRESENTATIONS AND WARRANTIES

     Parent and Seller represent and warrant to Buyer, as of the date of this Agreement and as of
Closing, as follows:

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     3.1 Organization of Seller. Seller is a corporation validly existing and in good
standing under the laws of the State of Nevada, and has all requisite power and authority to own
and lease the properties and assets it currently owns and leases and to conduct its activities as
such activities are currently conducted.

     3.2 Authority. Each of Seller and Parent has all requisite power and authority to
execute, deliver, and perform this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery, and performance of this Agreement and the consummation of the
transactions contemplated hereby by Parent and Seller have been duly and validly authorized by all
necessary action on the part of Parent and Seller, and this Agreement has been duly and validly
executed and delivered by Parent and Seller, and is the valid and binding obligation of each of
Parent and Seller, enforceable against Parent and Seller in accordance with its terms, except to
the extent that enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar laws relating to or affecting the rights
and remedies of creditors generally and (ii) general principles of equity.

     3.3 No Conflict; Required Consents. The execution, delivery, and performance by
Seller of this Agreement do not and will not (i) conflict with or violate any provision of the
Organizational Documents of Parent or Seller, (ii) violate any provision of any Legal Requirements,
(iii) except for Consents set forth on Schedule 3.3, conflict with, violate, result in a
breach of, constitute a default under (without regard to requirements of notice, lapse of time, or
elections of other persons, or any combination thereof) or accelerate or permit the acceleration of
the performance required by, any Contract or License to which Parent or Seller is a party and by
which the Assets are bound or affected, or (iv) result in the creation of imposition of any Lien
against or upon any of the Assets; or (v) except as set forth on Schedule 3.3, require any
consent, approval, or authorization of, or filing of any certificate, notice, application, report,
or other document with, any Governmental Authority or other Person.

     3.4 Subscribers. As of January 16, 2009, the Subscribers had the attributes set forth
in Schedule 3.4 attached hereto. Since January 16, 2009, there have been no material
changes to such attributes. None of the Purchased Subscribers is subject to current actions by the
attorney general of any state.

     3.5 Litigation. Except as set forth on Schedule 3.5, there is no (i)
outstanding Judgment against Parent or Seller requiring Parent or Seller to take any action of any
kind with respect to the Assets, or to which the Assets are subject or by which they are bound or
affected; or (ii) Litigation pending or, to Seller’s Knowledge, threatened, against Parent or
Seller that individually or in the aggregate might adversely affect the Assets or the ability of
Parent or Seller to perform their respective obligations under this Agreement.

     3.6 Taxes. Parent and Seller have duly and timely paid all Taxes with respect to the
Assets which have become due and payable by either of them. Neither Parent nor Seller has received
notice of, nor does either Parent or Seller have any Knowledge of, any notice of deficiency or
assessment of proposed deficiency or assessment from any taxing Governmental Authority with respect
to the Assets. There are no audits pending with respect to the Assets and

9

 

there are no outstanding agreements or waivers by Parent or Seller that extend the statutory
period of limitations applicable to any federal, state, local, or foreign tax returns or Taxes with
respect to the Assets. Parent and Seller have duly and timely filed in true and correct form all
Tax returns and Tax reports required to be filed by Parent or Seller with respect to the Assets.

     3.7 Billing Statements. Seller has delivered to Buyer true, complete and correct
copies of its internally prepared billing and collection statements reflecting the financial
results of the Purchased Subscribers for the months ending October 31, 2008, December 31, 2008 and
January 31, 2009 (collectively, the “Billing Statements”). The Billing Statements
accurately and completely present all of the cash flows, income, expenses, liabilities and
operations of Seller with respect to the Assets at the respective dates thereof.

     3.8 No Material Adverse Change. There has been no Material Adverse Change in the
Assets since December 31, 2008, and since such date, the Assets have not been materially and
adversely affected as a result of any fire, explosion, accident, casualty, labor trouble, flood,
drought, riot, storm, condemnation or act of God or public force or otherwise.

     3.9 No Undisclosed Liabilities. To the Knowledge of Seller, there are no, and on the
Closing Date there will not be any, liabilities of Seller (except, as to the Seller, such
liabilities that do not relate to or affect the Assets) of any kind whatsoever, known or unknown,
whether accrued, contingent, absolute, determined, determinable or otherwise, and to the Knowledge
of Seller, there is no existing condition, situation or set of circumstances that could reasonably
be expected to result in such a liability that is not disclosed on any Schedule or set forth in the
Billing Statements.

     3.10 Compliance with Legal Requirements. The operation of Parent’s and Seller’s
business as it relates to the Assets as currently conducted does not violate or infringe any Legal
Requirements currently in effect or, to the Knowledge of Seller, proposed to become effective.
Except as may be set forth on Schedule 3.10, neither Parent nor Seller has received notice
of any violation by Seller of any Legal Requirement applicable to the operation of Seller’s
business as it relates to the Assets as currently conducted, and knows of no basis for the
allegation of any such violation. Neither Parent nor Seller is in default of or in violation with
respect to any Judgment.

     3.11 Books and Records. All of the books, records, and accounts of Seller related to
the Assets are in all material respects true and complete, are maintained in accordance with good
business practices and all applicable Legal Requirements, and accurately present and reflect in all
material respects all of the transactions therein described.

     3.12 Terms and Conditions. Schedule 3.12 sets forth the standard terms and
conditions of Seller for each of the Purchased Subscribers. Except as set forth in Schedule
3.12, all of the Purchased Subscribers are subject to such standard terms and conditions.

     3.13 Finders and Brokers. Seller has not employed any financial advisor, broker or
finder, or incurred any liability for any financial advisory, brokerage, finder’s or similar fee or
commission in connection with the transaction contemplated by this Agreement for which Buyer
will in any way have any liability.

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ARTICLE 4

BUYER’S REPRESENTATIONS AND WARRANTIES

     Buyer represents and warrants to Seller, as of the date of this Agreement and as of the
Closing as follows:

     4.1 Organization and Qualification of Buyer. Buyer is a corporation duly organized
and validly existing under the laws of the State of Delaware and has all requisite power and
authority to own and lease the properties and assets it currently owns and leases and to conduct
its activities as such activities are currently conducted.

     4.2 Authority. Buyer has all requisite power and authority to execute, deliver, and
perform this Agreement and consummate the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement and the consummation of the transactions contemplated
hereby on the part of Buyer have been duly and validly authorized by all necessary action on the
part of Buyer. This Agreement has been duly and validly executed and delivered by Buyer, and is
the valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms,
except to the extent that enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar laws relating to or affecting the rights
and remedies of creditors generally and (ii) general principles of equity.

     4.3 No Conflict; Required Consents. The execution, delivery, and performance by Buyer
of this Agreement do not and will not (i) conflict with or violate any provision of the
Organizational Documents of Buyer, (ii) violate any provision of any Legal Requirements, or (iii)
require any consent, approval or authorization of, or filing of any certificate, notice,
application, report, or other document with, any Governmental Authority or other Person.

     4.4 Finders and Brokers. Buyer has not employed any financial advisor, broker or
finder, or incurred any liability for any financial advisory, brokerage, finder’s or similar fee or
commission in connection with the transaction contemplated by this Agreement for which Seller will
in any way have any liability.

ARTICLE 5

COVENANTS

     5.1 Transfer Taxes. All sales, use, transfer, and similar Taxes (but excluding Taxes
based on income or capital gains), fees, and assessments arising from or payable in connection with
the transfer of the Assets by Buyer shall be paid by Buyer.

     5.2 Data Transfer Procedures. The Parties will perform and comply with the customer
and data transfer procedures set forth on Schedule 5.2.

     5.3 Confidentiality. Each Party shall keep confidential any non-public information
that such Party may receive from another Party in connection with this Agreement unrelated to the
Assets as well as any non-public information in the possession of such party related to the

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Assets (any such information that a party is required to keep confidential pursuant to this
sentence shall be referred to as “Confidential Information”). Each Party shall not
disclose any Confidential Information to any other Person (other than its Affiliates and its and
its Affiliates’ directors, officers and employees, and representatives of its advisers and lenders)
or use such information to the detriment of the other; provided that (i) such Party may use and
disclose any such information once it has been publicly disclosed (other than by such Party in
breach of its obligations under this Section) or which, to its knowledge, rightfully has come into
the possession of such Party (other than from the other Party), and (ii) to the extent that such
Party may, in the reasonable judgment of its counsel, be compelled by Legal Requirements to
disclose any of such information, such Party may disclose such information if it has used
commercially reasonable efforts, and has afforded the other the opportunity, to obtain an
appropriate protective order, or other satisfactory assurance of confidential treatment, for the
information compelled to be disclosed.

     5.4 Nonsolicitation.

     (a) Parent and Seller hereby covenant and agree that, during a period of three years
commencing on the Closing Date (the “Covenant Period”), neither Parent, Seller nor
any of their Affiliates shall contact any Purchased Subscriber (i) with the intent of
interfering with their relationship with Buyer or (ii) seeking to establish a
revenue-generating relationship with such Purchased Subscriber which is competitive to the
Business.

     (b) Parent and Seller hereby agree that a violation or attempted or threatened
violation of the covenants or other provisions contained in this Section 5.4, or any
part thereof, by Parent and Seller will cause irreparable injury to Buyer with respect to
the Assets for which money damages would be inadequate, and that Buyer shall be entitled, in
addition to any other rights or remedies they may have, whether in law or in equity, to
obtain an injunction, enjoining and restraining Parent or Seller from violating or
attempting or threatening to violate any provision of this Agreement, including the
covenants contained in this Section 5.4.

ARTICLE 6

CLOSING

     6.1 Closing. The purchase and sale (the “Closing”) provided for in this
Agreement shall take place remotely by the exchange of counterpart signature pages and documents on
the date of this Agreement (the “Closing Date”).

     6.2 Seller’s Obligations. At Closing, Seller shall deliver or cause to be delivered
to Buyer, the following:

     (a) Bill of Sale and Assignment. A Bill of Sale in the form of Exhibit
D transferring the Assets from Seller to Buyer, signed by Seller.

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     (b) Assignment and Assumption Agreement. An Assignment and Assumption
Agreement in the form of Exhibit E (the “Assignment and Assumption
Agreement”) assigning all of Seller’s right, title and interest to the Contracts to
Buyer, signed by Seller.

     (c) Escrow Agreements. The Seller Fund Escrow Agreement and Buyer Fund Escrow
Agreement, each signed by Parent, Seller and Escrow Agent.

     (d) Books and Records. To the extent not previously delivered, copies of all
customer and subscriber lists, engineering records, files and records used by Seller in
connection with the Purchased Subscribers.

     (e) Consents. Any Consents, in form and substance satisfactory to Buyer.

     (f) Lien Releases. Results of searches of the appropriate public records (as
determined and paid for by Buyer), dated no more than ten days prior to the Closing Date, or
other evidence satisfactory to it, that there exist no Liens affecting the Assets or
reasonable assurances that any such Liens affecting the Assets will be terminated at or
prior to the Closing.

     (g) Certificate of Good Standing. A Certificate of Good Standing of Seller.

     (h) Final Format Data. The Final Format Data, as set forth in Section
2.3(b).

     (i) Other. Such other documents and instruments as shall be necessary to
effect the intent of this Agreement and consummate the transactions contemplated hereby.

     6.3 Buyer’s Obligations. At Closing, Buyer shall deliver or cause to be delivered to
Seller the following:

     (a) Purchase Price. The Purchase Price, as set forth in Section
2.3(a).

     (b) Escrow Deposit. Evidence of the deposit of the Buyer Escrow Deposit having
been deposited with Escrow Agent satisfactory to Parent.

     (c) Escrow Agreements. The Seller Fund Escrow Agreement and Buyer Fund Escrow
Agreement, each signed by Buyer and Escrow Agent.

     (d) Assignment and Assumption Agreement. The Assignment and Assumption
Agreement, signed by Buyer.

     (e) Other. Such other documents and instruments as shall be necessary to
effect the intent of this Agreement and consummate the transactions contemplated hereby.

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ARTICLE 7

INDEMNIFICATION

     7.1 Indemnification by Parent and Seller. Subject to the provisions of Sections
7.5 and 7.6, Parent and Seller shall, jointly and severally, defend, indemnify and hold
harmless Buyer, its Affiliates, agents, and representatives (“Buyer Indemnitees”), and any
third party claiming by or through any of them, as the case may be, from and against any and all
Losses arising out of or resulting from:

     (a) any material inaccuracy of a representation or warranty made by Seller or Parent in
this Agreement when made;

     (b) any material breach of a covenant, agreement, or obligation of Parent or Seller in
this Agreement;

     (c) the failure to timely pay, satisfy or discharge any of the Retained Liabilities;

     (d) any credits processed in error against Seller’s settlements or as an adjustment to
reserves by LECs or clearinghouses for which Buyer submitted the original billing to the LEC
or clearinghouse, as applicable; provided, however, that this indemnity shall terminate on
the Buyer Escrow Fund Termination Date; and

     (e) any adjustment to the Purchase Price pursuant to Section 2.3;

provided, however, that Buyer acknowledges and agrees that neither Parent nor Seller shall have any
liability to any Buyer Indemnitee under any provision of this Agreement for any Losses to the
extent that such Loss relates to action taken by the Buyer, its Affiliates or any other person
(other than the Seller in breach of this Agreement) after the Closing Date; provided, further, that
neither Parent nor Seller will have any liability to Buyer nor will Buyer have any right to
indemnification or reimbursement from Parent or Seller for refunds paid to Purchased Subscribers
directly by Buyer or its Affiliates related to services provided by Seller prior to Closing unless
such specific refund in approved in advance by Parent in writing. Buyer shall take and shall cause
its Affiliates to take all reasonable steps to mitigate any Losses upon becoming aware of any event
which would reasonably be expected to, or does, give rise thereto.

     7.2 Indemnification by Buyer. Subject to the provisions of Sections 7.5 and
7.6, Buyer shall defend, indemnify and hold harmless Parent, Seller, their respective
Affiliates, agents, and representatives (“Seller Indemnitees”), and any third party
claiming by or through any of them, as the case may be, from and against any and all Losses arising
out of or resulting from:

     (a) any material inaccuracy of a representation or warranty made by Buyer in this
Agreement when made;

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     (b) any material breach of a covenant, agreement, or obligation of Buyer in this
Agreement;

     (c) the failure to timely pay, satisfy or discharge any of the Assumed Obligations and
Liabilities;

     (d) any credits processed in error against Buyer’s settlements or as an adjustment to
reserves by LECs or clearinghouses for which Seller submitted the original billing to the
LEC or clearinghouse, as applicable; provided, however, that this indemnity shall terminate
on the Buyer Escrow Fund Termination Date; and

     (e) up to $38,000 per week for reasonable costs or fees borne by Parent or Seller for
continuing to provide billing services related to the Purchased Subscribers after the
Closing.

     7.3 Indemnification Procedure.

     (a) A Party seeking indemnification hereunder (the “Indemnified Party”) shall
give promptly to the Party obligated to provide indemnification to such Indemnified Party
(the “Indemnifying Party”) a written notice (a “Claim Notice”) describing in
reasonable detail the facts giving rise to the claim for indemnification hereunder and shall
include in such Claim Notice the amount or the method of computation of the amount of such
claim (if then known), and a reference to the provision of this Agreement or any other
agreement, document or instrument executed hereunder or in connection herewith upon which
such claim is based; provided, however, that the failure of any Indemnified Party to give
the Claim Notice promptly as required by this Section 7.3 shall not affect such
Indemnified Party’s rights under this Section 7.3, except to the extent such failure
is actually prejudicial to the rights and obligations of the Indemnifying Party.

     (b) After the giving of any Claim Notice pursuant hereto, the amount of indemnification
to which an Indemnified Party shall be entitled under this Section 7.3 shall be
determined:

     (i) by the written agreement of the Indemnified Party and the Indemnifying
Party; provided, however, that the Indemnifying Party shall be deemed to have agreed
to any claim by the Indemnified Party if the Indemnifying Party does not notify the
Indemnified Party in writing of the Indemnifying Party’s objection within 30 days of
receipt of the Claim Notice;

     (ii) by a final ruling, judgment or decree of any arbitrator or court of
competent jurisdiction; or

     (iii) by any other means to which the Indemnified Party and the Indemnifying
Party shall agree.

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     (c) The ruling, judgment or decree of an arbitrator or court shall be deemed final when
the time for appeal, if any, shall have expired and no appeal shall have been taken or when
all appeals taken shall have been finally determined. The Indemnified Party shall have the
burden of proof in establishing the amount of Losses suffered by it. All amounts due to the
Indemnified Party as so finally determined shall be paid by wire transfer of immediately
available funds within 10 days after such final determination.

     7.4 Third-Party Claims.

     (a) Promptly after receipt by a Party entitled to indemnity under this Article
7 of notice of the assertion of a third-party claim against it, such Indemnified Party
shall give notice to the Party obligated to indemnify under such Article of the assertion of
such third-party claim, provided that the failure to notify the Indemnifying Party will not
relieve the Indemnifying Party of any liability that it may have to any Indemnified Party,
except to the extent that the Indemnifying Party demonstrates that the defense of such
third-party claim is prejudiced by the Indemnified Party’s failure to give such notice.
After notice to the Indemnifying Party, the Indemnified Party shall promptly deliver to the
Indemnifying Party copies of all notices and documents (including court papers) relating to
that third-party claim.

     (b) If an Indemnified Party gives notice to the Indemnifying Party of the assertion of
a third-party claim (the “Third Party Claim Notice”), the Indemnifying Party shall
be entitled to participate in the defense of such third-party claim with counsel of its own
choice or to assume the defense of such third-party claim with counsel reasonably
satisfactory to the Indemnified Party. Subject to the provisions hereof, if the
Indemnifying Party does not give notice to the Indemnified Party of its election to assume
the defense of such third-party claim, the Indemnifying Party will be bound by any
determination made in such third-party claim or any compromise or settlement effected by the
Indemnified Party, including, without limitation, the payment of reasonable attorneys’ fees,
costs and expenses incurred in connection therewith; provided that the Indemnifying Party
shall not be liable for any compromise or settlement made by an Indemnified Party unless the
Indemnified Party has provided at least 20 business days’ advance written notice of a
pending compromise or settlement (which notice shall set forth or describe all material
terms of the pending compromise or settlement in reasonable detail) and within such period
Indemnifying Party does not give notice to Indemnified Party of both its rejection of the
terms of the compromise or settlement and its election to assume the defense of the related
third party claim.

     (c) After notice from the Indemnifying Party to the Indemnified Party of its election
to assume the defense of such third-party claim, the Indemnifying Party shall keep the
Indemnified Party reasonably informed as to the status of the third-party claim. The
Indemnifying Party shall not, so long as it diligently conducts such defense, be liable to
the Indemnified Party under this Article 7 for any fees of other counsel or any
other expenses with respect to the defense of such third-party claim, in each case
subsequently incurred by the Indemnified Party (after assumption of the defense by the
Indemnifying

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Party) if the Indemnified Party decides to participate in any such proceeding with
counsel of its choice and at its own expense. Notwithstanding the foregoing, the
Indemnifying Party shall be responsible for costs of investigation and fees of counsel or
any other expenses already incurred by the Indemnified Party prior to the assumption by the
Indemnifying Party of the defense of such third-party claim (provided that the Indemnified
Party has timely provided a Third Party Claim Notice). Furthermore, to the extent that
counsel for the Indemnified Party and the Indemnifying Party reasonably conclude in good
faith that, in light of any actual or potential conflict of interest or different and
material legal defenses available to the Indemnifying Party and the Indemnified Party, it
would be inappropriate for legal counsel selected by the Indemnifying Party to represent the
Indemnified Party with respect to certain claims or defenses, the Indemnified Party shall be
entitled to retain separate counsel at the Indemnifying Party’s expense with respect to such
claims and defenses.

     (d) If the Indemnifying Party assumes the defense of, and diligently defends, a
third-party claim, no compromise or settlement of such third-party claims may be effected by
the Indemnifying Party without the Indemnified Party’s prior written consent; provided that
such consent of the Indemnified Party shall not be required if (i) there is no finding or
admission of any violation of laws which affect the Indemnified Party or (ii) either (A) the
sole relief provided is monetary damages that are paid in full by the Indemnifying Party, or
(B) the Indemnifying Party agrees in writing to pay any amounts payable pursuant to a
settlement agreement and such settlement includes an unconditional and irrevocable release
of the Indemnified Party. The Indemnified Party shall have no Liability with respect to any
compromise or settlement of such third-party claims affected without its consent.

     (e) Notwithstanding the foregoing, the Indemnifying Party will not be entitled to
assume (or retain, as applicable) control of such defense if (A) the claim for
indemnification is with respect to any criminal proceeding, indictment or allegation against
the Indemnified Party, or (B) upon the Indemnifying Party failing to diligently defend such
claim in good faith, which failure continues for a period of 30 days following written
notice from the Indemnified Party to the Indemnifying Party.

     7.5 Survival of Representations and Warranties. Unless specified otherwise in this
Agreement, the representations and warranties of Parent, Seller and Buyer in this Agreement shall
survive Closing for a period of nine months, except for (i) those contained in Sections 3.1
(Organization of Seller), 3.2 (Authority), 3.3 (No Conflict; Required Consents),
3.6 (Taxes), 4.1 (Organization and Qualification of Buyer), 4.2 (Authority)
and 4.3 (No Conflict; Required Consents), which shall survive indefinitely. Neither
Parent, Seller nor Buyer shall have any liability under Sections 7.1(a) and 7.2(a),
respectively, unless a claim for Losses for which indemnification is sought thereunder is asserted
by Buyer, on the one hand, or Parent or Seller, on the other hand, within the applicable survival
period.

     7.6 Indemnification Limitations. The aggregate dollar amount of all payments Parent
or Seller shall be obligated to make pursuant to Section 7.1 of this Agreement shall be

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$1,000,000.00 (the “Cap”). No Buyer Indemnitee shall be entitled to any
indemnification pursuant to this Article 7 until such time as the Losses of all Buyer
Indemnitees exceed $50,000.00 (the “Basket”) and thereupon Parent and Seller shall become
obligated to indemnify the Buyer Indemnitees only for the amount by which such claims or Losses
exceed the Basket. Notwithstanding the foregoing, the Cap and Basket shall not apply to any Losses
resulting from (i) the material breach of any representation or warranty contained in Sections
3.2, 3.3 or 3.6, (ii) an adjustment to the Purchase Price in accordance with Section
2.3, (iii) settlement of credits processed in error by LECs or clearinghouses in accordance
with Section 2.6, or (iv) actual fraud, willful misconduct or intentional misrepresentation
by Parent or Seller.

     7.7 Net of Insurance Recoveries. With respect to the amount of any Losses subject to
indemnification under Article 7, the determination of such Losses shall be calculated net
of any actual recoveries obtained by the Indemnified Party or any of its Affiliates from any other
third party; provided, however, that notwithstanding the foregoing, nothing herein shall be deemed
to require any Indemnified Party to use efforts to effect recovery of available insurance claims in
connection with any claim for any Losses, or to purchase insurance with respect to matters subject
to indemnification hereunder, and decisions regarding the purchase of such insurance shall be at
each Party’s sole discretion.

     7.8 No Consequential Damages. Notwithstanding anything to the contrary elsewhere in
this Agreement, no Party shall, in any event, be liable to any other person for any consequential,
incidental, indirect, special or punitive damages of such other person, including loss of future
revenue, income or profits, or loss of business reputation or opportunity relating to the breach or
alleged breach hereof.

     7.9 Sole and Exclusive Remedy. From and after the Closing, the remedies provided for
in this Article 7 shall be the sole and exclusive remedy of any Indemnified Party for any claim
arising out of or related to this Agreement, the exhibits and schedules hereto or the transactions
contemplated hereby or thereby (regardless of the Legal Requirement or legal theory upon which
claim is based), including, but not limited to, the breach of any representation, warranty or
covenant contained in this Agreement, any exhibit or schedules to this Agreement, or any other
certificate or document delivered by the Parties hereto pursuant to the terms hereof; provided,
however, that nothing contained in this Agreement shall limit or impair any right that an
Indemnified Party may have to sue and obtain equitable relief, including specific performance and
other injunctive relief, or any right or remedy that the Indemnified Party may have against any
Indemnifying Party for any Losses incurred as a result of claims brought on the basis of fraud or
willful misconduct.

ARTICLE 8

MISCELLANEOUS PROVISIONS

     8.1 Expenses. Except as otherwise provided in this Agreement, each of the Parties
shall pay its own expenses and the fees and expenses of its counsel, accountants, and other experts
in connection with this Agreement.

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     8.2 Waivers. No action taken pursuant to this Agreement, including any investigation
by or on behalf of any party hereto, shall be deemed to constitute a waiver by the party taking the
action of compliance with any representation, warranty, covenant or agreement herein. The waiver
by any party hereto of any condition or of a breach of another provision of this Agreement shall
not operate or be construed as a waiver of any other condition or subsequent breach. The waiver by
any party of any of the conditions precedent to its obligations under this Agreement shall not
preclude it from seeking redress for breach of this Agreement other than with respect to the
condition so waived.

     8.3 Notices. All notices, requests, demands, applications, services of process, and
other communications which are required to be or may be given under this Agreement shall be in
writing and shall be deemed to have been duly given if sent by facsimile transmission, courier,
certified first class mail, postage prepaid, return receipt requested, or overnight delivery
service to the Parties hereto at the following addresses:

	 	To Seller: 	 	LiveDeal, Inc.

2490 E. Sunset Rd., Suite 100

Las Vegas, NV 89120

Attention: Michael Edelhart

Facsimile: 702-974-1180
	 
	 	Copy to: 	 	Snell & Wilmer L.L.P.

One Arizona Center

Phoenix, AZ 85004-2202

Attention: Dan Mahoney

Facsimile: 602-382-6070
	 
	 	To Buyer: 	 	Local.com Corporation

One Technology Drive, Building G

Irvine, CA 92618

Attention: Chief Financial Officer

Facsimile: 949-341-5396
	 
	 	Copy to: 	 	Rutan & Tucker, LLP

611 Anton Blvd, Suite 1400

Costa Mesa, CA 92626

Attention: Derek D. Dundas

Facsimile: (714) 546-9035

or to such other address as any party shall have furnished to the other by notice given in
accordance with this Section. Such notice shall be effective, (i) if sent by facsimile
transmission, when confirmation of transmission is received, or (ii) otherwise, upon actual receipt
or rejection by the intended recipient.

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     8.4 Publicity. Parent and Buyer shall consult with and cooperate with the other with
respect to the content and timing of all press releases and other public announcements. Except as
required by applicable legal requirements, neither Seller nor Buyer shall make any such release,
announcement, or statements without the prior written consent and approval of the other, and each
shall keep the existence and terms of this Agreement confidential.

     8.5 Binding Effect; Benefits. This Agreement shall inure to the benefit of and be
binding upon the Parties and their respective successors and permitted assigns. Except for the
assignment by Buyer to any Affiliate of Buyer, neither Buyer nor Seller shall assign this Agreement
or delegate any of its duties hereunder to any other party without the prior written consent of the
other, which consent shall not be unreasonably withheld.

     8.6 Entire Agreement; Amendments. This Agreement and the Exhibits and Schedules
hereto embody the entire agreement between the Parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings, oral or written, with respect thereto.
This Agreement may not be modified orally, but only by an agreement in writing signed by the Party
or Parties against whom any waiver, change, amendment, modification, or discharge may be sought to
be enforced.

     8.7 Governing Law. The validity, performance, and enforcement of this Agreement shall
be governed by the laws of the State of California, without giving effect to the principles of
conflicts of law of such state. The Parties agree that any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection with, this
Agreement or the transactions contemplated hereby or thereby may be brought in the United States
District Court for the Central District of California, Orange County Division, and each of the
Parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding.

     8.8 Counterparts. This Agreement may be executed in any number of counterparts, each
of which, when executed, shall be deemed to be an original and all of which together will be deemed
to be one and the same instrument.

     8.9 Further Assurances. From time to time after Closing, Seller shall, if requested by
Buyer, make, execute and deliver to Buyer such additional assignments, bills of sale, deeds and
other instruments of transfer, as may be necessary or proper to transfer to Buyer all of Seller’s
right, title, and interest in and to the Assets.

     8.10 Attorneys’ Fees. The prevailing party in any action to enforce the terms of this
Agreement shall be entitled to reimbursement by the other party for all costs (including reasonable
attorneys’ fees) incurred in connection with such proceeding, in addition to any other remedies to
which it may be entitled.

     8.11 Schedules and Exhibits; Headings. All references herein to schedules and
exhibits are to the schedules and exhibits attached hereto, which shall be incorporated in and
constitute a part of this Agreement by such reference. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning of this Agreement.

20

 

     8.12 Remedies Cumulative. Except as expressly provided otherwise in this Agreement,
in addition to any remedies provided in this Agreement, the Parties will have all remedies provided
at law or in equity. The rights and remedies provided in this Agreement or otherwise under
applicable laws will be cumulative and the exercise of any particular right or remedy will not
preclude the exercise of any other rights or remedies in addition to, or as an alternative of, such
right or remedy, except as expressly provided otherwise in this Agreement.

[Signature page follows.]

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     IN WITNESS WHEREOF, The Parties have executed this Agreement as of the date set forth above.

	 	 	 	 	 
	BUYER: 	Local.com Corporation

 	 
	 	/s/ Heath B. Clarke
 	 
	 	By: Heath B. Clarke 	 
	 	Its: Chief Executive Officer 	 
	 
	PARENT: 	LiveDeal, Inc.

 	 
	 	/s/ Michael Edelhart
 	 
	 	By: Michael Edelhart 	 
	 	Its: Chief Executive Officer 	 
	 
	SELLER: 	Telco Billing, Inc.

 	 
	 	/s/ Michael Edelhart
 	 
	 	By: Michael Edelhart 	 
	 	Its: President

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