EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER
by and among
EPHONE TELECOM, INC.,
CHAMPION TELEPORT, INC.
and
EPHONE MERGER CORP.
DATED AS OF AUGUST 5, 2003
TABLE OF CONTENTS
ARTICLE I - THE MERGER
Section 1.01 The Merger
Section 1.02 Closing
Section 1.03 Merger; Effective Time
Section 1.04 Effect of the Merger
Section 1.05 Certificate of Incorporation and Bylaws; Directors and Officers
Section 1.06 Further Actions
Section 1.07 Restrictions on Resale
Section 1.08 Exchange of Certificates
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF EPHONE
Section 2.01 Organization, Standing and Power
Section 2.02 Capitalization
Section 2.03 Authority for Agreement.
Section 2.04 Issuance of ePhone Shares
Section 2.05 SEC Reports; Financial Statements
Section 2.06 Governmental Consent
Section 2.07 Litigation
Section 2.08 Interested Party Transactions
Section 2.09 Compliance with Applicable Laws
Section 2.10 No Undisclosed Liabilities
Section 2.11 Tax Returns and Payment
Section 2.12 Tax-Free Reorganization
Section 2.13 Full Disclosure
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF CHAMPION.
Section 3.01 Organization, Standing and Power
Section 3.02 Capitalization
Section 3.03 Authority for Agreement
Section 3.04 Subsidiaries
Section 3.05 Lifetime Agreements
Section 3.06 No Undisclosed Liabilities
Section 3.07 Finders' Fees
ARTICLE IV - CERTAIN COVENANTS AND AGREEMENTS
Section 4.01 Covenants of Champion
Section 4.02 Covenants of ePhone
Section 4.03 Covenants of the Parties
ARTICLE V - CONDITIONS PRECEDENT
Section 5.01 Conditions Precedent to the Parties' Obligations
Section 5.02 Conditions Precedent to the Obligations of ePhone..
Section 5.03 Conditions Precedent to the Obligations of Champion.
ARTICLE VI - TERMINATION, AMENDMENT AND WAIVER
Section 6.01 Termination
Section 6.02 Effect of Termination
ARTICLE VII - CONFIDENTIALITY
Section 7.01 Confidentiality
ARTICLE VIII - INDEMNIFICATION
Section 8.01 Indemnification by ePhone
Section 8.02 Indemnification by Champion
Section 8.03 Indemnification of Exchange Agent
Section 8.04 Survival of Indemnification
ARTICLE IX - MISCELLANEOUS
Section 9.01 Non-survival of Representations and Warranties
Section 9.02 Expenses
Section 9.03 Applicable Law
Section 9.04 Notices
Section 9.05 Entire Agreement
Section 9.06 Assignment
Section 9.07 Headings; References
Section 9.08 Counterparts
Section 9.09 No Third Party Beneficiaries
Section 9.10 Severability; Enforcement
Section 9.11 Rules of Construction
Section 9.12 Exhibits
Section 9.13 Interpretation
List of Schedules
EXHIBITS
Certificate of Merger A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of August 5, 2003 (the
"Agreement") by and among ePhone Telecom, Inc., a corporation formed under the
laws of the State of Florida ("ePhone"), Champion Teleport, Inc., a corporation
formed under the laws of the State of Delaware ("Champion") and ePhone Merger
Corp., a corporation newly formed under the laws of the State of Delaware and a
wholly owned and operated subsidiary of ePhone ("Merger Sub"). ePhone, Champion
and Merger Sub are referred to herein individually as a "Party" and collectively
as the "Parties."
PREAMBLE
WHEREAS, ePhone, Champion and Merger Sub have determined that a
business combination between the Parties is advisable and in the best interests
of their respective companies and stockholders, and presents an opportunity for
their respective companies to achieve long-term strategic and financial
benefits;
WHEREAS, ePhone has proposed to acquire Champion pursuant to a merger
transaction whereby, pursuant to the terms and subject to the conditions of this
Agreement and in accordance with the GCL (as hereinafter defined), Champion
shall become a wholly owned subsidiary of ePhone (the "Merger") through the
merger of Merger Sub with and into Champion;
WHEREAS, pursuant to the Merger all issued and outstanding shares of
capital stock of Champion (the "Champion Shares") held by the stockholders of
Champion (the "Champion Stockholders") shall be cancelled and converted into the
right to receive that number of shares of the common stock of ePhone (the
"Merger Shares") par value $.001 per share (the "Shares"), equal (after ePhone
authorizes an additional 450,000,000 Shares pursuant to an annual or special
shareholder meeting for the specific purpose of amending ePhone's certificate of
incorporation to increase the number of authorized shares to 600,000,000 and
issues Shares to Champion Stockholders pursuant to Section 4.02(iii) hereof) to
a minimum of 80.8% of the issued and outstanding shares of ePhone on a fully
diluted basis;
WHEREAS, the obligation of the Parties to effect the Merger is subject
to the conditions set forth in Article V hereof;
WHEREAS, the Parties intend that the Merger qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the parties intend this Agreement to
qualify as a "plan of reorganization" within the meaning of Treasury Regulation
Sections 1.368-2(g) and 1.368-3(a).
WHEREAS, ePhone, Champion and Merger Sub are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by the provisions of Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, representations and warranties contained herein, the Parties hereto,
intending to be legally bound, hereby agree as follows:
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
set forth below:
"Applicable Law" means any domestic or foreign law, statute, regulation, rule,
policy, guideline or ordinance applicable to the businesses of the Parties, the
Merger and/or the Parties.
"Dollar" and "$" means lawful money of the United States of America.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in the United States of
America as promulgated by the American Institute of Certified Public Accountants
and the Financial Accounting Standards Board or any successor Institutes
concerning the treatment of any accounting matter.
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"GCL" means the General Corporation Law of the State of Delaware.
"Knowledge" means the knowledge after reasonable inquiry.
"Lien" means, with respect to any property or asset, any mortgage, lien, pledge,
charge, security interest, encumbrance or other adverse claim of any kind in
respect of such property or asset.
"Material Adverse Effect" with respect to any entity or group of entities means
any event, change or effect that has or would have a materially adverse effect
on the financial condition, business or results of operations of such entity or
group of entities, taken as a whole.
"Person" means any individual, corporation, partnership, trust or unincorporated
organization or a government or any agency or political subdivision thereof.
"Surviving Entity" shall mean Champion as the surviving entity in the Merger as
provided in Section 1.03.
"Tax" (and, with correlative meaning, "Taxes" and "Taxable") means:
(i) any income, alternative or add-on minimum tax, gross receipts tax,
sales tax, use tax, ad valorem tax, transfer tax, franchise tax, profits tax,
license tax, withholding tax, payroll tax, employment tax, excise tax, severance
tax, stamp tax, occupation tax, property tax, environmental or windfall profit
tax, custom, duty or other tax, impost, levy, governmental fee or other like
assessment or charge of any kind whatsoever together with any interest or any
penalty, addition to tax or additional amount imposed with respect thereto by
any governmental or Tax authority responsible for the imposition of any such tax
(domestic or foreign), and
(ii) any liability for the payment of any amounts of the type described
in clause (i) above as a result of being a member of an affiliated,
consolidated, combined or unitary group for any Taxable period, and
(iii) any liability for the payment of any amounts of the type
described in clauses (i) or (ii) above as a result of any express or implied
obligation to indemnify any other person.
"Tax Return" means any return, declaration, form, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
ARTICLE I
THE MERGER
SECTION 1.01 THE MERGER.
Upon the terms and subject to the conditions set forth in this
Agreement and in accordance with the GCL, at the Effective Time (as defined
herein), all Champion Shares shall be converted into the right to receive the
Merger Shares. In connection therewith, the following terms shall apply:
(i) Exchange Agent. ePhone's corporate counsel, Gersten, Savage,
Kaplowitz, Wolf & Marcus, LLP, shall act as the exchange agent (the "Exchange
Agent") for the purpose of exchanging Champion Shares for the Merger Shares. At
or prior to the Closing (as hereinafter defined), ePhone shall deliver to the
Exchange Agent the Merger Shares.
(ii) Conversion of Securities.
(a) Conversion of Champion Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of ePhone, Merger Sub,
Champion or the holders of any of their respective securities:
(x) Each Champion Share issued and outstanding
immediately prior to the Effective Time (other than the
shares to be cancelled in accordance with Section 1.01 (ii)(a)(z)), including
any rights with respect thereto, shall be converted into and represent the right
to receive, and shall be exchangeable for that number of shares (the "Merger
Shares") equal (after ePhone authorizes an additional 450,000,000 Shares
pursuant to an annual or special shareholder meeting for the specific purpose of
amending ePhone's certificate of incorporation to increase the number of
authorized shares to 600,000,000 and issues Shares to Champion Stockholders
pursuant to Section 4.02(iii) hereof) to a minimum of 80.8% of the issued and
outstanding shares of ePhone on a fully diluted basis (the "Conversion Rate").
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(y) All Champion Shares shall no longer be
outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except the right to
receive the Merger Shares to be issued pursuant to this Section 1.01(ii) (a)
(fractional shares may be issued to the hundredth decimal point) upon the
surrender of such certificate in accordance with Section 1.08, without interest.
(z) Each Champion Share that immediately prior to the
Effective Time is held by Champion as a treasury
share shall be cancelled and retired without payment of any consideration
therefor and without any conversion thereof into a right to receive the Merger
Shares.
(b) Conversion of Merger Sub Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of ePhone, Merger Sub,
Champion or the holders of any of their respective securities, each share of
capital stock of Merger Sub outstanding immediately prior to the Effective Time
shall be converted into one share of the common stock of the Surviving Entity
and the share of common stock of the Surviving Entity so issued in such
conversion shall constitute the only outstanding share of capital stock of the
Surviving Entity and the Surviving Entity shall be a wholly owned subsidiary of
ePhone.
(iii) Exemption from Registration. The Parties intend that the Merger
Shares to be conveyed by ePhone to the Champion Stockholders shall be exempt
from the registration requirements of the Securities Act pursuant to Section
4(2) of the Securities Act to Champion Stockholders and the rules and
regulations promulgated thereunder.
SECTION 1.02 CLOSING.
The closing of the Merger (the "Closing") will take place at the
offices of Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP, counsel to ePhone
("GSK"), at 101 East 52nd Street, New York, New York 10022, within one (1)
business day following the satisfaction or waiver of the conditions precedent
set forth in Article V or at such other date as ePhone and Champion shall agree
(the "Closing Date").
SECTION 1.03 MERGER; EFFECTIVE TIME.
At the Effective Time and subject to and upon the terms and conditions
of this Agreement, Merger Sub shall, and ePhone shall cause Merger Sub to, merge
with and into Champion in accordance with the provisions of the GCL, the
separate corporate existence of Merger Sub shall cease and Champion shall
continue as the Surviving Entity. The Effective Time shall occur upon the filing
with the Secretary of State of the State of Delaware of a Certificate of Merger
(the "Certificate of Merger") substantially in the form of Exhibit A and
executed in accordance with the applicable provisions of the GCL, or at such
later time as may be agreed to by ePhone and Champion and specified in the
Certificate of Merger subject to the satisfaction or waiver of each of the
conditions set forth in Article V (the "Effective Time"). The date on which the
Effective Time occurs is referred to as the "Effective Date." Provided that this
Agreement has not been terminated pursuant to Article VI, the Parties will cause
the Certificate of Merger to be filed as soon as practicable after the Closing.
SECTION 1.04 EFFECT OF THE MERGER.
The Merger shall have the effect set forth in Sections 259 and 261 of
the GCL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, all the properties, rights, privileges, powers and
franchises of Champion and Merger Sub shall vest in the Surviving Entity, and
all debts, liabilities and duties of Champion and Merger Sub shall become the
debts, liabilities and duties of the Surviving Entity. Each of ePhone and
Champion have separate tax years and each of ePhone and Champion consent to the
closing of the tax year for Champion as of August 4, 2003. Each of the parties
agree that Mr. Mahmoud Wahba shall be designated as the party responsible to
make all filings necessary to report the closing of Champion's tax year with the
Internal Revenue Service, including the execution of necessary documents or
agreements before and after closing. Each of the parties will fully cooperate
with Mr. Wahba with regard to such filings and documents or agreements.
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SECTION 1.05 CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.
Pursuant to the Merger:
(i) The Certificate of Incorporation and Bylaws of ePhone as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation and Bylaws of ePhone following the Merger.
(ii) The directors of ePhone subsequent to the Merger shall be the
current members of ePhone's Board of Directors, until the earlier of their
death, resignation or removal or until their respective successors are duly
appointed and qualified pursuant to Section 4.02 (ii) hereof. The officers of
ePhone subsequent to the Merger shall be the current officers of ePhone, as well
as Mahmoud Wahba, President, James Wahba Executive Vice President and John
Wahba,Executive Vice President.
SECTION 1.06 FURTHER ACTIONS.
If, at any time after the Effective Time, the Surviving Entity
considers or is advised that any deeds, bills of sale, assignments, assurances
or any other actions or things are necessary or desirable to vest, perfect or
confirm (of record or otherwise) in the Surviving Entity its right, title or
interest in, to or under any of the rights, properties, or assets of either
Champion or Merger Sub, or otherwise to carry out the intent and purposes of
this Agreement, the officers and directors of the Surviving Entity will be
authorized to execute and deliver, in the name and on behalf of each of Champion
and Merger Sub, all such deeds, bills of sale, assignments and assurances and to
take and do, in the name and on behalf of each of Champion and Merger Sub, all
such other actions and things as the Board of Directors of the Surviving Entity
may determine to be necessary or desirable to vest, perfect or confirm any and
all right, title and interest in, to and under such rights, properties or assets
in the Surviving Entity or otherwise to carry out the intent and purposes of
this Agreement.
SECTION 1.07 RESTRICTIONS ON RESALE
(i) The Merger Shares. The Merger Shares will not be registered under
the Securities Act, or the securities laws of any state, and cannot be
transferred, hypothecated, sold or otherwise disposed of until; (i) a
registration statement with respect to such securities is declared effective
under the Securities Act, or (ii) ePhone receives an opinion of counsel for the
stockholder, reasonably satisfactory to counsel for ePhone, that an exemption
from the registration requirements of the Securities Act is available.
The certificates representing the number of Merger Shares for which the
Champion Shares shall have been issued pursuant to this Agreement shall contain
a legend substantially as follows:
"THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL A
REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED EFFECTIVE UNDER
SUCH ACT, OR EPHONE TELECOM, INC. RECEIVES AN OPINION OF COUNSEL FOR
THE HOLDER REASONABLY SATISFACTORY TO COUNSEL FOR EPHONE TELECOM, INC.
THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS
AVAILABLE."
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SECTION 1.08 EXCHANGE OF CERTIFICATES.
(i) EXCHANGE OF CERTIFICATES. After the Effective Time and pursuant to
a customary letter of transmittal or other instructional form provided by the
Exchange Agent to the Champion Stockholders, the Champion Stockholders shall be
required to surrender all their Champion Shares to the Exchange Agent, and the
Champion Stockholders shall be entitled upon such surrender to receive in
exchange therefor certificates representing the proportionate number of Merger
Shares into which the Champion Shares theretofore represented by the stock
transfer forms so surrendered shall have been exchanged pursuant to this
Agreement. Until so surrendered, each outstanding certificate which, prior to
the Effective Time, represented Champion Shares shall be deemed for all
corporate purpose, subject to the further provisions of this Article I, to
evidence the ownership of the number of whole Merger Shares for which such
Champion Shares have been so exchanged. No dividend payable to holders of Merger
Shares of record as of any date subsequent to the Effective Time shall be paid
to the owner of any certificate which, prior to the Effective Time, represented
Champion Shares, until such certificate or certificates representing all the
relevant Champion Shares, together with a stock transfer form, are surrendered
as provided in this Article I or pursuant to letters of transmittal or other
instructions with respect to lost certificates provided by the Exchange Agent.
(ii) FULL SATISFACTION OF RIGHTS. All Merger Shares for which the
Champion Shares shall have been exchanged pursuant to this Article I shall be
deemed to have been issued in full satisfaction of all rights pertaining to the
Champion Shares.
(iii) EXCHANGE OF CERTIFICATES. All certificates representing Champion
Shares converted into the right to receive Merger Shares pursuant to this
Article I shall be furnished to ePhone subsequent to delivery thereof to the
Exchange Agent pursuant to this Agreement.
(iv) CLOSING OF TRANSFER BOOKS. On the Effective Date, the stock
transfer book of Champion shall be deemed to be closed and no transfer of
Champion Shares shall thereafter be recorded thereon.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF EPHONE
Except as set forth in the schedules to this Agreement, disclosure in
any one of which shall apply to any and all representations and warranties made
in this Agreement, and except as otherwise disclosed in writing to Champion,
EPhone hereby represents and warrants to Champion, as of the date of this
Agreement and as of the Effective Time, as follows:
SECTION 2.01 ORGANIZATION, STANDING AND POWER.
ePhone is a company duly incorporated, validly existing and in good
standing under the laws of the State of Florida and has corporate power and
authority to conduct its business as presently conducted by it and to enter into
and perform this Agreement and to carry out the transactions contemplated by
this Agreement. ePhone is duly qualified to do business as a foreign corporation
doing business in each state in which it owns or leases real property and where
the failure to be so qualified and in good standing would not have a Material
Adverse Effect on ePhone or its business. ePhone does not have an ownership
interest in any corporation, partnership (general or limited), limited liability
company or other entity, whether foreign or domestic (collectively such
ownership interests including capital stock).
SECTION 2.02 CAPITALIZATION.
There are 150,000,000 shares of capital stock of ePhone authorized,
consisting of 150,000,000 shares of common stock, $0.001 par value per share and
zero shares of preferred stock. As of the date of this Agreement, there were
40,476,298 shares of common stock issued and outstanding.
Except as disclosed on Schedule 2.02(a) hereto, no Shares have been reserved for
issuance to any Person, and there are no other outstanding rights, warrants,
options or agreements for the purchase of Shares except as provided in this
Agreement. Except as disclosed on Schedule 2.02(b) hereto, no Person is entitled
to any rights with respect to the issuance or transfer of the Merger Shares. All
outstanding Shares are validly issued, fully paid, non-assessable, not subject
to pre-emptive rights and have been issued in compliance with all state and
federal securities laws or other Applicable Law.
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SECTION 2.03 AUTHORITY FOR AGREEMENT.
The execution, delivery, and performance of this Agreement by ePhone
has been duly authorized by all necessary corporate action, and this Agreement,
upon its execution by the Parties, will constitute the valid and binding
obligation of ePhone enforceable against it in accordance with and subject to
its terms, except as enforceability may be affected by bankruptcy, insolvency or
other laws of general application affecting the enforcement of creditors'
rights. Except as set forth above or in Schedule 2.03 attached hereto, the
execution and consummation of the transactions contemplated by this Agreement
and compliance with its provisions by ePhone will not violate any provision of
Applicable Law and will not conflict with or result in any breach of any of the
terms, conditions, or provisions of, or constitute a default under, ePhone's
Certificate of Incorporation or Bylaws, as the case may be and in each case as
amended, or, in any material respect, any indenture, lease, loan agreement or
other agreement or instrument to which ePhone is a party or by which it or any
of its properties are bound, or any decree, judgment, order, statute, rule or
regulation applicable to ePhone except to the extent that any breach or
violation of any of the foregoing would not constitute or result in a Material
Adverse Effect on ePhone taken as a whole.
SECTION 2.04 ISSUANCE OF EPHONE SHARES
The Merger Shares issuable to the Champion Stockholders as the holders
of the Champion Shares will when issued pursuant to this Agreement be duly and
validly authorized and issued, fully paid and non-assessable.
SECTION 2.05 SEC REPORTS; FINANCIAL STATEMENTS.
(i) ePhone has made available to Champion (through reference to
documents filed with the Securities Exchange Commission ("SEC") by its
Electronic Data Gathering Analysis and Retrieval System ("EDGAR") or otherwise)
a correct and complete copy of each report, schedule and registration statement
filed by ePhone with the SEC since its inception (the "SEC Reports"), which are
all the forms, reports and documents (other than preliminary material) required
to be filed by ePhone with the SEC since inception. With the exception of any
Forms 3, 4 and 5 and any Schedule 13D filed by ePhone on behalf of the ePhone
Stockholders, the SEC Reports (a) were prepared in compliance with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
(b) did not at the time they were filed (or if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing) contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(ii) Each set of consolidated financial statements (including, in each
case, any related notes thereto) contained in the SEC Reports was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto and except that
unaudited statements do not contain footnotes in substance or form required by
GAAP, as is permitted by the Exchange Act). Such financial statements fairly
present, or will fairly present, the consolidated financial position of ePhone
as at the dates thereof and the consolidated results of their operations and
their consolidated cash flows for the periods then ended, subject, in the case
of unaudited interim financial statements, to normal, recurring year-end audit
adjustments.
(iii) To the Knowledge of ePhone, except as disclosed in the
consolidated financial statements contained in the SEC Reports or on Schedule
2.05 hereof, there has been no material change in the financial condition,
operations or business of ePhone since March 31, 2003.
(iv) The financial statements of ePhone for the fiscal year ended
December 31, 2002 as filed with the SEC on Form 10-KSB and the financial
statements of ePhone for the quarter ended March 31, 2003 as filed with the SEC
on Form 10-QSB (collectively, the "EPhone Financial Statements") and included
among the SEC Reports are attached hereto as Exhibit B.
(v) Except as otherwise disclosed in the consolidated financial
statements contained in the SEC Reports, ePhone does not have any material
liabilities.
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SECTION 2.06 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on
Schedule 2.06, since March 31, 2003:
(a) there has not been (i) any material adverse change in the business,
operations, properties, assets, or condition of ePhone or (ii) any damage,
destruction, or loss to ePhone (whether or not covered by insurance) materially
and adversely affecting the business, operations, properties, assets, or
condition of ePhone;
(b) ePhone has not (i) amended its articles of organization or
operating agreement; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind whatsoever to
stockholders or purchased or redeemed, or agreed to purchase or redeem, any
outstanding Capital Stock; (iii) waived any rights of value which in the
aggregate are extraordinary or material considering the business of ePhone; (iv)
made any material change in its method of management, operation, or accounting;
(v) entered into any other material transaction; (vi) made any accrual or
arrangement for payment of bonuses or special compensation of any kind or any
severance or termination pay to any present or former officer or employee; (vii)
increased the rate of compensation payable or to become payable by it to any of
its officers or any of its employees whose monthly compensation exceeds $5,000;
or (viii) made any increase in any profit sharing, bonus, deferred compensation,
insurance, pension, retirement, or other employee benefit plan, payment, or
arrangement made to, for, or with its officers, directors, or employees;
(c) ePhone has not (i) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability (absolute
or contingent) except liabilities incurred in the ordinary course of business;
(ii) paid any material obligation or liability (absolute or contingent) other
than current liabilities reflected in or shown on the most recent ePhone balance
sheet, and current liabilities incurred since that date in the ordinary course
of business; (iii) sold or transferred, or agreed to sell or transfer, any of
its assets, properties, or rights (except assets, properties, or rights not used
or useful in its business which, in the aggregate have a value of less than
$50,000), or canceled, or agreed to cancel, any debts or claims (except debts or
claims which in the aggregate are of a value of less than $50,000); (iv) made or
permitted any amendment or termination of any contract, agreement, or license to
which it is a party if such amendment or termination is material, considering
the business of ePhone; or (v) issued, delivered, or agreed to issue or deliver
any stock, bonds or other corporate securities including debentures (whether
authorized and unissued or held as treasury stock); and
(d) to the best knowledge of ePhone, ePhone has not become subject to
any law or regulation which materially and adversely affects, or in the future
may adversely affect, the business, operations, properties, assets, or condition
of ePhone.
SECTION 2.07 INVENTORY
Except as set forth on Schedule 2.07 attached hereto, (a) all material
items of ePhone's inventory have been acquired in the ordinary and usual course
of business; (b) all material items of ePhone's inventory are of a quality and
quantity usable in the ordinary and usual course of business; and (c) the
quantities of each type of ePhone's inventory are not materially excessive, but
are reasonable, adequate and appropriate.
SECTION 2.08 ASSETS; ENCUMBRANCES
Except as set forth on Schedule 2.08(a), ePhone has good and valid
title to all of its assets. ePhone's assets comprise all of the business,
properties, assets (however, employees, to the extent that they could be
considered assets, are not included as assets in this Section) and goodwill
employed by ePhone and its affiliates in connection with its business.
Except as set forth on Schedule 2.08(b), all assets (excluding assets
that are described in Section 2.08 as leased assets or assets owned by third
parties) are owned by ePhone free and clear of all title defects or objections,
liens, claims, charges, rights of others, security interests or other
encumbrances of any nature whatsoever, including without limitation, any leases,
escrows, options, security or other deposits, rights of redemption, chattel
mortgages, conditional sales contracts, liens, collateral security arrangements
and other title or interest retention arrangements, except for liens for current
taxes not yet due.
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SECTION 2.09 TITLE AND RELATED MATTERS.
ePhone has good and marketable title to all of its properties,
inventory, interests in properties, and assets, real and personal, which are
reflected in the most recent balance sheet on Form 10-QSB or acquired after that
date (except properties, interests in properties, and assets sold or otherwise
disposed of since such date in the ordinary course of business). ePhone owns,
free and clear of any liens, mortgages, security interests, claims,
encumbrances, royalty interests, or other restrictions or limitations of any
nature whatsoever ("Liens"), any and all of its assets. ePhone has not received
any notice of infringement of or conflict with asserted rights of others with
respect to any product, technology, data, trade secrets, know-how, proprietary
techniques, trademarks, service marks, tradenames, or copyrights which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling, or
finding, would have a materially adverse effect on the business, operations,
financial condition, income, or business prospects of ePhone or any portion of
its properties, assets, or rights.
SECTION 2.10 INTELLECTUAL PROPERTY AND INTANGIBLE ASSETS.
Except as set forth on schedule 2.10, to the knowledge of ePhone,
ePhone has full legal right, title and interest in and to all of the
intellectual property utilized in the operation of its business. No rights of
any other person are violated by the use by ePhone of the intellectual property.
None of the intellectual property has ever been declared invalid or
unenforceable, or is the subject of any pending or, to the knowledge of ePhone,
threatened action for opposition, cancellation, declaration, infringement, or
invalidity, unenforceability or misappropriation or like claim, action or
proceeding.
SECTION 2.11 GOVERNMENTAL CONSENT
No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other federal, state, county, local or other foreign governmental
authority, instrumentality, agency or commission or any third party, including a
party to any agreement with ePhone, is required by or with respect to ePhone in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, except for such consents, waivers,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under (i) applicable securities laws, (ii) the GCL, or (iii) the
Florida Business Corporation Act.
SECTION 2.12 LITIGATION
Except as disclosed on Schedule 2.12 hereof, there is no action, suit,
investigation, audit or proceeding pending against, or to the best knowledge of
ePhone threatened against or affecting, ePhone or any of its assets or
properties before any court or arbitrator or any governmental body, agency or
official.
SECTION 2.13 INTERESTED PARTY TRANSACTIONS
Except as set forth in Schedule 2.13 (a) attached hereto, ePhone is not
indebted to any officer or director of ePhone (except for compensation and
reimbursement of expenses incurred in the ordinary course of business), and no
such person is indebted to ePhone, except as disclosed on Schedule 2.13 (b)
hereof or in the SEC Reports.
SECTION 2.14 COMPLIANCE WITH APPLICABLE LAWS.
Except as set forth in Schedule 2.14 attached hereto, the business of
ePhone has not been, and is not being, conducted in violation of any Applicable
Law, except for possible violations which individually or in the aggregate have
not had and are not reasonably likely to have a Material Adverse Effect. No
investigation or review by any governmental entity with respect to ePhone is
pending or, to the Knowledge of ePhone, threatened, nor has any governmental
entity indicated an intention to conduct the same, except for investigations or
reviews which individually or in the aggregate would not have, nor be reasonably
likely to have, a Material Adverse Effect.
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SECTION 2.15 NO UNDISCLOSED LIABILITIES.
Except as set forth on Schedule 2.15 hereto, there are no liabilities
or debts of ePhone of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, and there is no existing
condition, situation or set of circumstances which could reasonably be expected
to result in such a liability or debt.
SECTION 2.16 TAX RETURNS AND PAYMENT
ePhone has duly and timely filed all material Tax Returns required to
be filed by it and has duly and timely paid all Taxes shown thereon to be due,
except as reflected in the SEC Reports and except for Taxes being contested in
good faith. Except as disclosed in the SEC Reports, there is no material claim
for Taxes that is a lien against the property of ePhone other than liens for
Taxes not yet due and payable, none of which Taxes is material. ePhone has not
received notification of any audit of any Tax Return of ePhone being conducted
or pending by a Tax authority where an adverse determination could have a
Material Adverse Effect, no extension or waiver of the statute of limitations on
the assessment of any Taxes has been granted by ePhone which is currently in
effect, and ePhone is not a party to any agreement, contract or arrangement with
any Tax authority or otherwise, which may result in the payment of any material
amount in excess of the amount reflected on the SEC Reports.
SECTION 2.17 TAX-FREE REORGANIZATION
None of ePhone, Merger Sub nor any entity affiliated therewith: (i) has
undertaken the obligation to investigate as to whether ePhone, Merger Sub or any
entity affiliated therewith has taken or agreed to take any action that would
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368 of the Code; or (ii) makes any representation or warranty as to the
qualification of the Merger as a reorganization within the meaning of Section
368 of the Code. Based on the foregoing, to the knowledge of ePhone and Merger
Sub none of ePhone, Merger Sub nor any entity affiliated therewith has taken or
agreed to take any action or is aware of any fact or circumstance that would
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368 of the Code.
SECTION 2.18 LABOR AND EMPLOYMENT MATTERS
Schedule 2.18 attached hereto contains a true and complete list, by
category, of all current full-time employees, current part-time employees, other
employees and consultants currently employees or engaged by the ePhone who
render services to ePhone as of the date hereof, including a description of any
and all written contracts, written agreements, written commitments and written
arrangements relating thereto, and a description of the rate and nature of all
compensation payable by the ePhone to, and the amount of vacation, sick days,
personal days or other leave accrued by, each such person or entity. Except as
set forth on Schedule 2.18, ePhone is not a party to or bound by any collective
bargaining agreement or any other agreement with a labor union, and, to the
knowledge of ePhone, there has been no effort by any labor union or any other
person during the twenty-four (24) months prior to the date hereof to organize
any employees or consultants of ePhone who are not already members of a
collective bargaining unit into one or more collective bargaining units, nor, to
the knowledge of the ePhone, are any such efforts being conducted. There is no
pending or, to the knowledge of ePhone, threatened labor dispute, strike or work
stoppage which affects or which may affect the business of ePhone, or which may
interfere with its continued operations. To the knowledge of ePhone, neither the
ePhone nor any agent, representative or employee thereof has within the last
twenty-four (24) months committed any unfair labor practice as defined in the
National Labor Relations Act, as amended, and there is no pending or threatened
charge or complaint against ePhone by or with the National Labor Relations Board
or any representative thereof. There has been no strike, walkout or work
stoppage involving any of the employees or consultants during the twenty-four
(24) months prior to the date hereof. ePhone has complied, in all material
respects, with applicable laws, rules and regulations relating to employment,
civil rights and equal employment opportunities or other employment practices,
including but not limited to, the Civil Rights Act of 1964, the Fair Labor
Standards Act, the Americans with Disabilities Act, as amended and the
Immigration Reform and Control Act of 1986, as amended. ePhone has received no
notice of any claim before any governmental body brought by or on behalf of any
employee, prospective employee, former employee, retiree, labor organization or
other representative of employees or any governmental body or, to the knowledge
of ePhone is any such claim threatened against ePhone . ePhone is not a party
to, or otherwise bound by, any order relating to its employees or employment
practices. ePhone has paid in full to all of its employees all wages, salaries,
commissions, bonuses, benefits and other compensation due and payable to such
employees. No current or former employee of ePhone is (i) absent on a military
leave of absence and/or eligible for rehire under the terms of the Uniformed
Services Employment and Reemployment Rights Act, or (ii) absent on a leave of
absence under the Family and Medical Leave Act.
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SECTION 2.19 EMPLOYEE BENEFITS
There is no employee benefit plan (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), and (ii)
no other benefit plan, program, contract or arrangement of any kind whatsoever,
covering the employees or consultants of ePhone or which is sponsored,
maintained or contributed to by ePhone or to which ePhone has an obligation to
contribute (all such employee benefit plans and other benefit plans, programs,
contracts or arrangements hereinafter individually and collectively called the
"Employee Benefit Plan(s)"). A true, complete and correct copy of each of the
Employee Benefit Plans (and all amendments thereto, whether currently effective
or to become effective at a later date) have been provided to ePhone. In the
case of any Employee Benefit Plan which is not in written form, a materially
true, materially complete and materially correct description of such Employee
Benefit Plan has been provided to ePhone. No Employee Benefit Plan is (i)
subject to Section 412 of the Internal Revenue Code or Section 306 of ERISA,
(ii) a "multiemployer plan" within the meaning of Section 3(37) of ERISA, or
(iii) a single employer plan (within the meaning of Section 4001(a)(15) of
ERISA) which has two or more contributing sponsors at least two of whom are not
under common control. Any and all amounts which ePhone is required to pay as
contributions or otherwise, or with respect to the Employee Benefit Plans have
been timely paid.
SECTION 2.20 FULL DISCLOSURE.
The SEC Reports and the representations and warranties of ePhone
contained in this Article II of this Agreement do not contain or will not
contain, any untrue statement of a material fact, or omit to state a material
fact required to be stated herein or therein or necessary to make the statements
herein or therein, in the light of the circumstances under which they were made,
not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CHAMPION
Except as set forth in the schedules to this Agreement, disclosure in
any one of which shall apply to any and all representations and warranties made
in this Agreement, and except as otherwise disclosed in writing to ePhone and
Merger Sub, Champion hereby represents and warrants to ePhone and Merger Sub, as
of the date of this Agreement and as of the Effective Time, as follows:
SECTION 3.01 ORGANIZATION, STANDING AND POWER.
Champion is a privately held corporation duly organized under the laws
of the State of Delaware, and has full corporate power and authority to conduct
its business as presently conducted by it and to enter into and perform this
Agreement and to carry out the transactions contemplated by this Agreement.
Champion is duly qualified to do business as a foreign corporation doing
business in each state or other jurisdiction in which it owns or leases real
property and where the failure to be so qualified and in good standing would
have a Material Adverse Effect. Other than as provided in Section 3.04 below,
Champion does not have any ownership interest in any corporation, partnership
(general or limited), limited liability company or other entity, whether foreign
or domestic (collectively such ownership interests including capital stock).
SECTION 3.02 CAPITALIZATION.
There are 1,000 Champion Shares authorized, consisting of 1,000 shares
of common stock (the "Champion Common Shares"), no par value per share, and zero
shares of preferred stock. As of the date of this Agreement, there were 100
issued and outstanding Champion Common Shares. Except as disclosed on Schedule
3.02 (a) hereto, no Champion Shares have been reserved for issuance to any
Person, and there are no other outstanding rights, warrants, options or
agreements for the purchase of Champion Shares except as provided in this
Agreement. Except as disclosed on Schedule 3.02(b) hereto, no Person is entitled
to any rights with respect to the conversion, exchange or delivery of the
Champion Shares. The Champion Shares have been issued in compliance with all
Applicable Law.
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SECTION 3.03 AUTHORITY FOR AGREEMENT.
The execution, delivery and performance of this Agreement by Champion
has been duly authorized by all necessary corporate action, and this Agreement
constitutes the valid and binding obligation of Champion, enforceable against it
in accordance with its terms, except as enforceability may be affected by
bankruptcy, insolvency or other laws of general application affecting the
enforcement of creditors' rights. The execution and consummation of the
transactions contemplated by this Agreement and compliance with its provisions
by Champion will not violate any provision of Applicable Law and will not
conflict with or result in any breach of any of the terms, conditions, or
provisions of, or constitute a default under, any of their respective
certificates of incorporation or bylaws, or, in any material respect, any
indenture, lease, loan agreement or other agreement instrument to which Champion
is a party or by which it or any of its properties are bound, or any decree,
judgment, order, statute, rule or regulation applicable to Champion, except to
the extent that any breach or violation of any of the foregoing would not
constitute or result in a Material Adverse Effect.
SECTION 3.04 SUBSIDIARIES
Except as disclosed on Schedule 3.04 hereof, Champion has no
subsidiaries.
SECTION 3.05 CHAMPION AGREEMENTS
Except as provided on Schedule 3.05 hereof, Champion is not a party to
any material agreements.
SECTION 3.06 FINANCIAL STATEMENTS.
(i) Champion has made available to ePhone copies of its audited
consolidated financial statements for the year ended December 31, 2002 (Champion
Financial Statements"). The Champion Financial Statements: (a) were prepared in
compliance with the requirements of the Securities Act or the Exchange Act, as
the case may be, and (b) did not at the time they were prepared contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(ii) Each set of consolidated financial statements (including, in each
case, any related notes thereto) contained in the Champion Financial Statements
was prepared in accordance with GAAP applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto). Such
financial statements fairly present, or will fairly present, the consolidated
financial position of Champion as at the dates thereof and the consolidated
results of their operations and their consolidated cash flows for the periods
then ended, subject, in the case of unaudited interim financial statements, to
normal, recurring year-end audit adjustments.
(iii) To the Knowledge of Champion, except as disclosed in the
consolidated financial statements contained in the Champion Financial Statements
or on Schedule 3.06 hereof, there has been no material change in the financial
condition, operations or business of Champion since December 31, 2002.
(iv) Except as otherwise disclosed in the consolidated financial
statements contained in the Champion Financial Statements, Champion does not
have any material liabilities.
SECTION 3.07 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on
Schedule 3.07, since December 31, 2002:
(a) there has not been (i) any material adverse change in the business,
operations, properties, assets, or condition of Champion or (ii) any damage,
destruction, or loss to Champion (whether or not covered by insurance)
materially and adversely affecting the business, operations, properties, assets,
or condition of Champion;
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(b) Champion has not (i) amended its articles of organization or
operating agreement; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind whatsoever to
stockholders or purchased or redeemed, or agreed to purchase or redeem, any
outstanding Capital Stock; (iii) waived any rights of value which in the
aggregate are extraordinary or material considering the business of Champion;
(iv) made any material change in its method of management, operation, or
accounting; (v) entered into any other material transaction; (vi) made any
accrual or arrangement for payment of bonuses or special compensation of any
kind or any severance or termination pay to any present or former officer or
employee; (vii) increased the rate of compensation payable or to become payable
by it to any of its officers or any of its employees whose monthly compensation
exceeds $5,000; or (viii) made any increase in any profit sharing, bonus,
deferred compensation, insurance, pension, retirement, or other employee benefit
plan, payment, or arrangement made to, for, or with its officers, directors, or
employees;
(c) Champion has not (i) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability (absolute
or contingent) except liabilities incurred in the ordinary course of business;
(ii) paid any material obligation or liability (absolute or contingent) other
than current liabilities reflected in or shown on the most recent Champion
balance sheet, and current liabilities incurred since that date in the ordinary
course of business; (iii) sold or transferred, or agreed to sell or transfer,
any of its assets, properties, or rights (except assets, properties, or rights
not used or useful in its business which, in the aggregate have a value of less
than $50,000), or canceled, or agreed to cancel, any debts or claims (except
debts or claims which in the aggregate are of a value of less than $50,000);
(iv) made or permitted any amendment or termination of any contract, agreement,
or license to which it is a party if such amendment or termination is material,
considering the business of Champion; or (v) issued, delivered, or agreed to
issue or deliver any stock, bonds or other corporate securities including
debentures (whether authorized and unissued or held as treasury stock); and
(d) to the best knowledge of Champion, Champion has not become subject
to any law or regulation which materially and adversely affects, or in the
future may adversely affect, the business, operations, properties, assets, or
condition of Champion.
SECTION 3.08 GOVERNMENTAL CONSENT
No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other federal, state, county, local or other foreign governmental
authority, instrumentality, agency or commission or any third party, including a
party to any agreement with Champion, is required by or with respect to Champion
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except for such consents,
waivers, approvals, orders, authorizations, registrations, declarations and
filings as may be required under (i) applicable securities laws, or (ii) the
GCL.
SECTION 3.09 ASSETS; ENCUMBRANCES
Except as set forth on Schedule 3.09(a), Champion has good and valid
title to all of its assets. Champion's assets comprise all of the business,
properties, assets (however, employees, to the extent that they could be
considered assets, are not included as assets in this Section) and goodwill
employed by Champion and its affiliates in connection with its business.
Except as set forth on Schedule 3.09(b), all assets (excluding assets
that are described in Section 3.09 as leased assets or assets owned by third
parties) are owned by Champion free and clear of all title defects or
objections, liens, claims, charges, rights of others, security interests or
other encumbrances of any nature whatsoever, including without limitation, any
leases, escrows, options, security or other deposits, rights of redemption,
chattel mortgages, conditional sales contracts, liens, collateral security
arrangements and other title or interest retention arrangements, except for
liens for current taxes not yet due.
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SECTION 3.10 TITLE AND RELATED MATTERS.
Champion has good and marketable title to all of its properties,
inventory, interests in properties, and assets, real and personal, which are
reflected in the most recent balance sheet included in the Champion Financial
Statements or acquired after that date (except properties, interests in
properties, and assets sold or otherwise disposed of since such date in the
ordinary course of business). Champion owns, free and clear of any liens,
mortgages, security interests, claims, encumbrances, royalty interests, or other
restrictions or limitations of any nature whatsoever ("Liens"), any and all of
its assets. Champion has not received any notice of infringement of or conflict
with asserted rights of others with respect to any product, technology, data,
trade secrets, know-how, proprietary techniques, trademarks, service marks,
tradenames, or copyrights which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling, or finding, would have a materially adverse
effect on the business, operations, financial condition, income, or business
prospects of Champion or any portion of its properties, assets, or rights.
SECTION 3.11 INTELLECTUAL PROPERTY AND INTANGIBLE ASSETS.
Except as set forth on schedule 3.11, to the knowledge of Champion,
Champion has full legal right, title and interest in and to all of the
intellectual property utilized in the operation of its business. No rights of
any other person are violated by the use by Champion of the intellectual
property. None of the intellectual property has ever been declared invalid or
unenforceable, or is the subject of any pending or, to the knowledge of
Champion, threatened action for opposition, cancellation, declaration,
infringement, or invalidity, unenforceability or misappropriation or like claim,
action or proceeding.
SECTION 3.12 LITIGATION
Except as disclosed on Schedule 3.12 hereof, there is no action, suit,
investigation, audit or proceeding pending against, or to the best knowledge of
Champion threatened against or affecting, Champion or any of its assets or
properties before any court or arbitrator or any governmental body, agency or
official.
SECTION 3.13 INTERESTED PARTY TRANSACTIONS
Except as set forth in Schedule 3.13 (a) attached hereto, Champion is
not indebted to any officer or director of Champion (except for compensation and
reimbursement of expenses incurred in the ordinary course of business), and no
such person is indebted to Champion, except as disclosed on Schedule 3.13 (b)
hereof or in the Champion Financial Statements.
SECTION 3.14 COMPLIANCE WITH APPLICABLE LAWS.
Except as set forth in Schedule 3.14 attached hereto, the business of
Champion has not been, and is not being, conducted in violation of any
Applicable Law, except for possible violations which individually or in the
aggregate have not had and are not reasonably likely to have a Material Adverse
Effect. No investigation or review by any governmental entity with respect to
Champion is pending or, to the Knowledge of Champion, threatened, nor has any
governmental entity indicated an intention to conduct the same, except for
investigations or reviews which individually or in the aggregate would not have,
nor be reasonably likely to have, a Material Adverse Effect.
SECTION 3.15 NO UNDISCLOSED LIABILITIES.
Except as set forth on Schedule 3.15 hereto, there are no liabilities
or debts of Champion of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, and there is no existing
condition, situation or set of circumstances which could reasonably be expected
to result in such a liability or debt.
SECTION 3.16 TAX RETURNS AND PAYMENT
Champion has duly and timely filed all material Tax Returns required to
be filed by it and has duly and timely paid all Taxes shown thereon to be due,
except as reflected in the Champion Financial Statements and except for Taxes
being contested in good faith. Except as disclosed in the Champion Financial
Statements, there is no material claim for Taxes that is a lien against the
property of Champion other than liens for Taxes not yet due and payable, none of
which Taxes is material. Champion has not received notification of any audit of
any Tax Return of Champion being conducted or pending by a Tax authority where
an adverse determination could have a Material Adverse Effect, no extension or
waiver of the statute of limitations on the assessment of any Taxes has been
granted by Champion which is currently in effect, and Champion is not a party to
any agreement, contract or arrangement with any Tax authority or otherwise,
which may result in the payment of any material amount in excess of the amount
reflected on the Champion Financial Statements.
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SECTION 3.17 FULL DISCLOSURE.
The Champion Financial Statements and the representations and
warranties of Champion contained in this Article III of this Agreement do not
contain or will not contain, any untrue statement of a material fact, or omit to
state a material fact required to be stated herein or therein or necessary to
make the statements herein or therein, in the light of the circumstances under
which they were made, not misleading.
SECTION 3.18 FINDERS' FEES
Except as disclosed on Schedule 3.18 attached hereto, Champion has not
incurred, nor will it incur, directly or indirectly, any liability for brokers'
or finders' fees or agents' commissions or investment bankers' fees or any
similar charges in connection with this Agreement or any transaction
contemplated hereby.
ARTICLE IV
CERTAIN COVENANTS AND AGREEMENTS
SECTION 4.01 COVENANTS OF CHAMPION
Champion covenants and agrees that, during the period from the date of this
Agreement until the Closing Date, Champion shall, other than as contemplated by
this Agreement or for the purposes of effecting the Exchange and Closing
pursuant to this Agreement or other than to the extent no Material Adverse
Effect would be incurred, conduct its business as presently operated and solely
in the ordinary course, and consistent with such operation, and, in connection
therewith, without the written consent of ePhone:
(i) shall not amend its Certificate of Incorporation or Bylaws;
(ii) shall not pay or agree to pay to any employee, officer or director
compensation that is in excess of the current compensation level of such
employee, officer or director other than salary increases or payments made in
the ordinary course of business or as otherwise provided in any contracts or
agreements with any such employees;
(iii) shall not merge or consolidate with any other entity or acquire
or agree to acquire any other entity;
(iv) shall not sell, transfer, or otherwise dispose of any assets
required for the operations of Champion's business except in the ordinary course
of business consistent with past practices;
(v) shall not create, incur, assume, or guarantee any indebtedness for
money borrowed except in the ordinary course of business, or create or suffer to
exist any mortgage, lien or other encumbrance on any of its assets, except those
in existence on the date hereof or those granted pursuant to agreements in
effect on the date of this Agreement or provided by EPhone and/or any of its
affiliates;
(vi) shall not make any capital expenditure or series of capital
expenditures except in the ordinary course of business;
(vii) shall not declare or pay any dividends on or make any
distribution of any kind with respect to the Champion Shares;
(viii) shall notify ePhone immediately in the event of any material
loss or damage to any of Champion's material assets;
(ix) shall pay premiums in respect of all present insurance coverage of
the types and in the amounts as are in effect as of the date of this Agreement;
(x) shall seek to preserve the present employees, reputation and
business organization of Champion and Champion's relationship with its clients
and others having business dealings with it;
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(xi) shall not issue any additional Champion Shares or take any action
affecting the capitalization of Champion;
(xii) shall use commercially reasonable efforts to comply with and not
be in default or violation under any law, regulation, decree or order applicable
to Champion's business, operations or assets where such violation would have a
Material Adverse Effect;
(xiii) shall not grant any severance or termination pay to any
director, officer or any other employees of Champion, other than pursuant to
agreements in effect on the date of this Agreement or as otherwise disclosed in
the documents delivered pursuant to this Agreement;
(xiv) shall not change any of the accounting principles or practices
used by it, except as may be required as a result of a change in law or in GAAP,
whether in respect of Taxes or otherwise;
(xv) shall not terminate or waive any right of substantial value other
than in the ordinary course of business; and
(xvi) shall not enter into any material contract or commitment other
than in the ordinary course of business.
SECTION 4.02 COVENANTS OF EPHONE
(i) Directors. Upon completion of the Closing, representatives of
Champion will be authorized to appoint a majority of the members of ePhone's
board of directors.
(ii) Shareholder meeting. Following the Closing, ePhone agrees to hold
an annual or special meeting of shareholders for the specific purposes of (i)
amending ePhone's certificate of incorporation to increase its authorized Shares
from 150,000,000 to 600,000,000 and (ii) considering a reverse stock split.
(iii) Issuance of Shares. Upon execution of this Agreement, ePhone will
issue 109,523,702 Shares to the Champion Stockholders. Immediately after ePhone
increases the number of authorized Shares to 600,000,000, ePhone shall issue to
the Champion Stockholders that number of Shares equal to the difference between
that number of Shares necessary to cause Champion to hold a minimum of 80.8% of
the issued and outstanding shares of ePhone on a fully diluted basis (after
ePhone authorizes an additional 450,000,000 Shares pursuant to an annual or
special shareholder meeting for the specific purpose of amending ePhone's
certificate of incorporation to increase the number of authorized shares to
600,000,000) and 109,523,702.
(iv) Written Consent. Immediately following the Closing, the Champion
Stockholders and Carmine Teglialatela shall execute a written consent of the
shareholders of ePhone authorizing the actions described in 4.02(ii) and (iii)
to be taken.
SECTION 4.03 COVENANTS OF THE PARTIES
(i) Tax-free Reorganization. The Parties intend that the Merger qualify
as a Tax-free reorganization under Sections 368(a) of the Code, as amended, and
the Parties will take the position for all purposes that the Merger shall
qualify as a reorganization under such Section. In addition, the Parties
covenant and agree that they will not engage in any action, or fail to take any
action, which action or failure to take action would reasonably be expected to
cause the Merger to fail to qualify as a Tax-free "reorganization" under Section
368(a) of the Code, whether or not otherwise permitted by the provisions of this
Agreement;
(ii) Announcement. Neither Champion, on the one hand, nor ePhone on the
other hand, shall issue any press release or otherwise make any public statement
with respect to this Agreement or the transactions contemplated hereby without
the prior consent of the other Party (which consent shall not be unreasonably
withheld), except as may be required by applicable law or securities regulation.
Notwithstanding anything in this Section 4.03 to the contrary, the Parties will,
to the extent practicable, consult with each other before issuing, and provide
each other the opportunity to review and comment upon, any such press release or
other public statements with respect to this Agreement and the transactions
contemplated hereby whether or not required by Applicable Law.
15
(iii) Notification of Certain Matters. Champion shall give prompt
notice to ePhone, and ePhone shall give prompt notice to Champion, of:
(a) The occurrence, or nonoccurrence, of any event the
occurrence, or nonoccurrence, of which would be reasonably likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time; and
(b) Any material failure of Champion on the one hand, or
ePhone, on the other hand, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder.
(iv) Reasonable Best Efforts. Before Closing, upon the terms and
subject to the conditions of this Agreement, the Parties agree to use their
respective reasonable best efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things necessary, proper or advisable
(subject to applicable laws) to consummate and make effective the Merger and
other transactions contemplated by this Agreement as promptly as practicable
including, but not limited to:
(a) The preparation and filing of all forms, registrations and
notices required to be filed to consummate the Merger, including without
limitation, any approvals, consents, orders, exemptions or waivers by any third
party or governmental entity; and
(b) The satisfaction of the other Party's conditions precedent
to Closing.
(v) Access to Information
(a) Inspection by Champion. ePhone will make available for
inspection by Champion, during normal business hours and in a manner so as not
to interfere with normal business operations, all of ePhone's records (including
tax records), books of account, premises, contracts and all other documents in
ePhone's possession or control that are reasonably requested by Champion to
inspect and examine the business and affairs of ePhone. ePhone will cause its
managerial employees and regular independent accountants to be available upon
reasonable advance notice to answer questions of Champion concerning the
business and affairs of ePhone. Champion will treat and hold as confidential any
information they receive from ePhone in the course of the reviews contemplated
by this Section 4.03(v). No examination by Champion will, however, constitute a
waiver or relinquishment by Champion of its rights to rely on ePhone's
covenants, representations and warranties made herein or pursuant hereto.
(b) Inspection by EPhone. Champion will make available for
inspection by ePhone, during normal business hours and in a manner so as not to
interfere with normal business operations, all of Champion's records (including
tax records), books of account, premises, contracts and all other documents in
Champion's possession or control that are reasonably requested by ePhone to
inspect and examine the business and affairs of Champion. Champion will cause
its managerial employees and regular independent accountants to be available
upon reasonable advance notice to answer questions of ePhone concerning the
business and affairs of Champion. ePhone will treat and hold as confidential any
information they receive from Champion in the course of the reviews contemplated
by this Section 4.03 (v). No examination by ePhone will, however, constitute a
waiver or relinquishment by ePhone of its rights to rely on Champion's
covenants, representations and warranties made herein or pursuant hereto.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01 CONDITIONS PRECEDENT TO THE PARTIES' OBLIGATIONS.
The obligations of the Parties as provided herein shall be subject to
each of the following conditions precedent, unless waived by both ePhone and
Champion:
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(i) Consents, Approvals. The Parties shall have obtained all necessary
consents and approvals of their respective boards of directors, their
stockholders (including any applicable classes thereof) and all consents,
approvals and authorizations required under their respective charter documents,
and all material consents, including any material consents and waivers by the
Parties' respective lenders and other third-parties, if necessary, to the
consummation of the transactions contemplated by this Agreement.
(ii) Absence of Certain Litigation. No action or proceeding shall be
threatened or pending before any governmental entity or authority which, in the
reasonable opinion of counsel for the Parties, is likely to result in a
restraint, prohibition or the obtaining of damages or other relief in connection
with this Agreement or the consummation of the Merger.
(iii) Absence of Trading in ePhone's Securities. No executive officer,
director, or principal shareholder of either ePhone or Champion shall have
effected any transactions with respect to the securities of ePhone from the date
hereof through and including the completion of the Merger.
(iv) Lease Agreement. The Parties shall have executed and delivered a
mutually satisfactory lease agreement between ePhone and JJTM, Inc., an
affiliate of Champion, for JJTM's Oxford, CT facilities ("JJTM Facilities") for
a period of ten (10) years at fair market value, with an option for ten (10)
additional years, including ePhone's right of first refusal to purchase the JJTM
Facilities.
(v) Security Agreement. ePhone and Champion shall (i) enter into a
Security Agreement with Champion Holding, Inc., a Delaware corporation, granting
a security interest in all of the assets of Champion to Champion Holding, Inc.,
in order to secure the $380,000 loan from Champion Holding, Inc., which loan is
evidenced by a book entry on the books of Champion Teleport, Inc., and (ii)
deliver such Security Agreement to Champion Holding, Inc.
SECTION 5.02 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EPHONE
The obligations of ePhone as provided herein shall be subject to each
of the following conditions precedent, unless waived by ePhone:
(i) Consents And Approvals. Champion shall have obtained all material
consents, including any material consents and waivers by Champion's lenders and
other third-parties, if necessary, to the consummation of the transactions
contemplated by this Agreement.
(ii) Representations and Warranties. The representations and warranties
by Champion in Article III herein shall be true and accurate in all material
respects on and as of the Closing Date with the same force and effect as though
such representations and warranties had been made at and as of the Closing Date,
except to the extent that any changes therein are specifically contemplated by
this Agreement or the same shall not have a Material Adverse Effect.
(iii) Performance. Champion shall have performed and complied in all
material respects with all agreements to be performed or complied with by it
pursuant to this Agreement prior at or prior to the Closing or the same shall
not have a Material Adverse Effect.
(iv) Proceedings and Documents. All corporate, company and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to ePhone and its counsel, and
ePhone and its counsel shall have received all such counterpart originals (or
certified or other copies) of such documents as they may reasonably request.
(v) Certificate of Good Standing. Champion shall have delivered to
ePhone a certificate as to the good standing of Champion certified by the
Secretary of State of the State of Delaware prior to the Closing Date.
(vi) Material Changes. Except as contemplated by this Agreement, since
the date hereof, Champion shall not have suffered a Material Adverse Effect.
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(vii) Fairness Opinion. ePhone's board of directors shall have received
from a reputable investment banking firm (the "ePhone Financial Advisor") a duly
executed Fairness Opinion (the "ePhone Fairness Opinion") in form and content
reasonably acceptable to the board of directors of ePhone to the effect that,
after review of the businesses, valuation of the Champion telecommunications
equipment, financial condition, assets, liabilities and prospects of Champion
and the terms and conditions of the proposed Merger as to the ePhone Financial
Advisor, the terms and conditions of the Merger are fair from a financial point
of view to the stockholders of ePhone.
(viii) Due Diligence. ePhone shall have completed to its own
satisfaction due diligence in relation to Champion.
SECTION 5.03 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF CHAMPION
The obligation of Champion on the Closing Date as provided herein shall
be subject to the satisfaction, on or prior to the Closing Date, of the
following conditions precedent, unless waived by Champion:
(i) Employment Agreements. ePhone covenants and agrees that ePhone
shall seek, in good faith, to enter into employment agreements with those
individuals listed on Schedule 5.03 attached hereto, on terms and in a form
which will be satisfactory to ePhone and such individuals. Additionally, ePhone
shall seek, in good faith, to enter into employment agreements with Mahmoud
Wahba, James Wahba and John Wahba, key employees of Champion, upon such terms
and conditions as shall be acceptable to ePhone and such individuals.
(ii) Consents And Approvals. ePhone shall have obtained all material
consents, including any material consents and waivers of its respective lenders
and other third-parties, if necessary, to the consummation of the transactions
contemplated by this Agreement.
(iii) Representations And Warranties. The representations and
warranties by ePhone in Article II herein shall be true and accurate in all
material respects on and as of the Closing Date with the same force and effect
as though such representations and warranties had been made at and as of the
Closing Date, except to the extent that any changes therein are specifically
contemplated by this Agreement or the same shall not have a Material Adverse
Effect.
(iv) Performance. ePhone shall have performed and complied in all
material respects with all agreements to be performed or complied with by it
pursuant to this Agreement prior to or at the Closing or the same shall not have
a Material Adverse Effect.
(v) Proceedings And Documents. All corporate, company and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to Champion and its counsel, and
Champion and its counsel shall have received all such counterpart originals (or
certified or other copies) of such documents as they may reasonably request.
(vi) Certificate of Good Standing. ePhone shall have delivered to
Champion a certificate as to the good standing of ePhone certified by the
Secretary of State of the State of Florida prior to the Closing Date.
(vii) Material Changes. Except as contemplated by this Agreement, since
the date hereof, ePhone shall not have suffered a Material Adverse Effect.
(viii) Due Diligence. Champion shall have completed to its own
satisfaction due diligence in relation to ePhone.
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ARTICLE VI
TERMINATION, BREAK-UP FEES, AMENDMENT AND WAIVER
SECTION 6.01 TERMINATION.
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time by:
(i) The mutual written consent of the Boards of Directors of the
Parties;
(ii) Either ePhone, on the one hand, or Champion, on the other hand, if
any governmental entity or court of competent jurisdiction shall have issued an
order, decree or ruling or taken any other action (which order, decree, ruling
or other action the Parties shall use their commercially reasonable best efforts
to lift), which restrains, enjoins or otherwise prohibits the Merger or the
issuance of the Merger Shares pursuant to the Merger and such order, decree,
ruling or other action shall have become final and non-appealable;
(iii) ePhone, if Champion shall have breached in any material respect
any of its representations, warranties, covenants or other agreements contained
in this Agreement, and the breach cannot be or has not been cured within 15
calendar days after the giving of written notice by ePhone to Champion;
(iv) Champion, if ePhone shall have breached in any material respect
any of its representations, warranties, covenants or other agreements contained
in this Agreement, and the breach cannot be or has not been cured within 15
calendar days after the giving of written notice by Champion to ePhone; or
(v) Without any action on the part of the Parties if required by
Applicable Law.
SECTION 6.02 EFFECT OF TERMINATION.
If this Agreement is terminated as provided in Section 6.01, written
notice of such termination shall be given by the terminating Party to the other
Party specifying the provision of this Agreement pursuant to which such
termination is made, this Agreement shall become null and void and there shall
be no liability on the part of ePhone or Champion, provided, that nothing in
this Agreement shall relieve any Party from any liability or obligation with
respect to any willful breach of this Agreement and provided, further, that
termination shall not affect accrued rights or liabilities of any party.
ARTICLE VII
CONFIDENTIALITY
SECTION 7.01 CONFIDENTIALITY
ePhone, on the one hand, and Champion, on the other hand, will keep
confidential all information and documents obtained from the other, including
but not limited to any information or documents provided pursuant to Section
4.03 hereof, which are designated by such Party as confidential (except for any
information disclosed to the public pursuant to a press release authorized by
the Parties) and in the event the Closing does not occur or this Agreement is
terminated for any reason, will promptly return such documents and all copies of
such documents and all notes and other evidence thereof, including material
stored on a computer, and will not use such information for its own advantage,
except to the extent that (i) the information must be disclosed by law, (ii) the
information becomes publicly available by reason other than disclosure by the
Party subject to the confidentiality obligation, (iii) the information is
independently developed without use of or reference to the other Party's
confidential information, (iv) the information is obtained from another source
not obligated to keep such information confidential, or (v) the information is
already publicly known or known to the receiving Party when disclosed as
demonstrated by written documentation in the possession of such Party at such
time. Notwithstanding anything herein to the contrary, except as reasonably
necessary to comply with applicable securities laws, the Parties may disclose to
any and all persons, without limitation of any kind, the tax treatment (as
defined in Treas. Reg. ss. 1.6011-4) and tax structure (as defined in Treas.
Reg. ss. 1.6011-4) of the transactions contemplated hereby and all materials of
any kind that are or have been provided to any Party relating to such tax
treatment or tax structure, provided that in the case of any materials that
contain information other than the tax treatment or tax structure of the
transactions contemplated hereby (including, but not limited to, any information
relating to the identity of any party to the transactions contemplated hereby),
this sentence shall apply to such materials only to the extent that such
materials contain the tax treatment or tax structure of the transactions
contemplated hereby and the applicable Party shall take all action necessary to
prevent the disclosure of such other information as otherwise provided herein.
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ARTICLE VIII
INDEMNIFICATION
SECTION 8.01 INDEMNIFICATION BY EPHONE
ePhone shall indemnify, defend and hold harmless each of Champion, any
subsidiary or affiliated thereof and each person who is now, or has been at any
time prior to the date hereof or who becomes prior to the Closing, an officer,
director or partner of Champion, any subsidiary or affiliated thereof or an
employee of Champion, any subsidiary or affiliated thereof and their respective
heirs, legal representatives, successors and assigns (the "Champion Indemnified
Parties") against all losses, claims, damages, costs, expenses (including
attorneys' fees), liabilities or judgments or amounts that are paid in
settlement of or in connection with any threatened or actual claim, action,
suit, proceeding or investigation based in whole or in part on or arising in
whole or in part out of (i) any breach of this Agreement by ePhone or any
subsidiary or affiliated thereof, including but not limited to failure of any
representation or warranty to be true and correct at or before the Closing, or
(ii) any act, omission or conduct of any officer, director or agent of ePhone or
any subsidiary or affiliated thereof prior to the Closing, whether asserted or
claimed prior to, at or after, the Closing, or (iii) relating to the
consummation of the transactions contemplated herein, and any action taken in
connection therewith ("Champion Indemnified Liabilities"). Any Champion
Indemnified Party wishing to claim indemnification under this Section 8.01, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify ePhone, but the failure so to notify shall not relieve ePhone from any
liability that it may have under this Section 8.01, except to the extent that
such failure would materially prejudice ePhone.
SECTION 8.02 INDEMNIFICATION BY CHAMPION
Champion shall indemnify, defend and hold harmless each of ePhone, any
subsidiary or affiliate thereof and each person who is now, or has been at any
time prior to the date hereof or who becomes prior to the Closing, an officer,
director or partner of ePhone, any subsidiary or affiliate thereof or an
employee of ePhone, any subsidiary or affiliate thereof and their respective
heirs, legal representatives, successors and assigns (the "ePhone Indemnified
Parties") against all losses, claims, damages, costs, expenses (including
attorneys' fees), liabilities or judgments or amounts that are paid in
settlement of or in connection with any threatened or actual claim, action,
suit, proceeding or investigation based in whole or in part on or arising in
whole or in part out of (i) any breach of this Agreement by Champion or any
subsidiary or affiliate thereof, including but not limited to failure of any
representation or warranty to be true and correct at or before the Closing, or
(ii) any act, omission or conduct of any officer, director or agent of Champion
or any subsidiary or affiliate thereof prior to the Closing, whether asserted or
claimed prior to, at or after, the Closing, or (iii) relating to the
consummation of the transactions contemplated herein, and any action taken in
connection therewith ("ePhone Indemnified Liabilities"). Any ePhone Indemnified
Party wishing to claim indemnification under this Section 8.02, upon learning of
any such claim, action, suit, proceeding or investigation, shall notify
Champion, but the failure so to notify shall not relieve Champion from any
liability that it may have under this Section 8.02, except to the extent that
such failure would materially prejudice Champion.
SECTION 8.03 INDEMNIFICATION OF EXCHANGE AGENT
(i) ePhone, Champion and Merger Sub (for the purposes of this Section
8.03, the "Indemnitors") agree to indemnify the Exchange Agent and its partners,
officers, directors, employees and agents (collectively, the "Indemnitees")
against, and hold them harmless of and from, any and all loss, liability, cost,
damage and expense, including without limitation, reasonable counsel fees, which
the Indemnitees may suffer or incur by reason of any action, claim or proceeding
brought against the Indemnitees arising out of or relating in any way to the
Exchange Agent's service in such capacity, unless such action, claim or
proceeding is the result of the willful misconduct or gross negligence of the
Indemnitees.
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(ii) If the indemnification provided for in Section 8.03(i) is
applicable, but for any reason is held to be unavailable, the Indemnitors shall
contribute such amounts as are just and equitable to pay, or to reimburse the
Indemnitees for, the aggregate of any and all losses, liabilities, costs,
damages and expenses, including counsel fees, actually incurred by the
Indemnitees as a result of or in connection with, and any amount paid in
settlement of, any action, claim or proceeding arising out of or relating in any
way to any actions or omissions of the Indemnitors.
SECTION 8.04 SURVIVAL OF INDEMNIFICATION
All rights to indemnification under this Article 8 shall survive the
consummation of the Merger and the termination of this Agreement. The provisions
of this Article 8 are intended to be for the benefit of, and shall be
enforceable by, each ePhone Indemnified Party, each Champion Indemnified Party,
and his or her heirs and representatives and the Exchange Agent. No Party shall
enter into any settlement regarding the foregoing without prior approval of the
Champion Indemnified Party or the ePhone Indemnified Party, as the case may be
or, if related in any way to the duties of the Exchange Agent hereunder, the
Exchange Agent.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except as set forth in Article VIII. All such representations and
warranties will be extinguished on consummation of the Merger and none of the
Parties nor any of their officers, directors, members, employees or stockholders
shall be under any liability whatsoever with respect to any such representation
or warranty after such time. This Section 9.01 shall not limit any covenant or
agreement of the Parties which by its terms contemplates performance after the
Effective Time.
SECTION 9.02 EXPENSES.
Except as contemplated by this Agreement, all costs and expenses
incurred in connection with this Agreement and the consummation of the
transactions contemplated by this Agreement shall be paid by the Party incurring
such expenses.
SECTION 9.03 APPLICABLE LAW.
Except to the extent that the law of the State of Delaware is
mandatorily applicable to the Merger (which shall be governed by the GCL), this
Agreement shall be governed by the laws of the State of New York as applied to
agreements entered into and to be performed in such state.
SECTION 9.04 NOTICES.
All notices and other communications under this Agreement shall be in
writing and shall be deemed to have been duly given or made as follows:
(i) If sent by registered or certified mail in the United States,
return receipt requested, upon receipt;
(ii) If sent by reputable overnight air courier (such as Federal
Express), 2 business days after being sent;
(iii) If sent by facsimile transmission, with a copy mailed on the same
day in the manner provided in clauses (i) or (ii) above, when transmitted and
receipt is confirmed by telephone; or
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(iv) If otherwise actually personally delivered, when delivered.
All notices and other communications under this Agreement shall be sent
or delivered as follows:
If to Champion, to:
Champion Teleport, Inc.
88 South Water Street
Greenwich, CT 06830
Attention: Mr. Mahmoud Wahba
TelePhone:
Telecopy:
with a copy to (which shall not constitute notice):
Jackson Walker, LLP
901 Main Street, Suite 6000
Dallas, TX 75202
Attention: George Diamond, Esq.
TelePhone: (214) 953-6000
Telecopy: (214) 953-5822
If to EPhone, to:
ePhone Telecom, Inc.
1145 Herndon Parkway
Herndon, Virginia 20170
Attention: Carmine Taglialatela, Jr., CEO
TelePhone: (703) 787-7000
Fax: (703)
with a copy to (which shall not constitute notice):
Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP
101 East 52nd Street
New York, NY 10022
Attention: Jay M. Kaplowitz, Esq.
TelePhone: (212) 752-9700
Facsimile: (212) 980-5192
Each Party may change its address by written notice in accordance with
this Section.
SECTION 9.05 ENTIRE AGREEMENT.
This Agreement (including the documents and instruments referred to in
this Agreement) contains the entire understanding of the Parties with respect to
the subject matter contained in this Agreement, and supersedes and cancels all
prior agreements, negotiations, correspondence, undertakings and communications
of the Parties, oral or written, respecting such subject matter.
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SECTION 9.06 ASSIGNMENT.
Neither this Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned by any of the Parties (whether by
operation of law or otherwise) without the prior written consent of the other
Parties; provided that in no event may the right to indemnification provided by
Article VIII hereto be assigned by any of the Parties, with or without consent,
except by operation of law. Subject to the immediately foregoing sentence of
this Section 9.06, this Agreement will be binding upon, inure to the benefit of
and be enforceable by, the Parties and their respective successors and assigns.
SECTION 9.07 HEADINGS; REFERENCES.
The article, section and paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. All references herein to "Articles" or
"Sections" shall be deemed to be references to Articles or Sections of this
Agreement unless otherwise indicated.
SECTION 9.08 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which shall be considered one
and the same agreement.
SECTION 9.09 NO THIRD PARTY BENEFICIARIES.
Except as expressly provided by this Agreement, nothing herein is
intended to confer upon any person or entity not a Party to this Agreement any
rights or remedies under or by reason of this Agreement.
SECTION 9.10 SEVERABILITY; ENFORCEMENT.
Any term or provision of this Agreement that is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provisions shall be interpreted to be only
so broad as is enforceable.
SECTION 9.11 RULES OF CONSTRUCTION.
The Parties agree that they have been represented by counsel during the
negotiation and execution of this Agreement and, therefore, waive the
application of any law, regulation, holding or rule of construction providing
that ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document.
SECTION 9.12 EXHIBITS.
All of the exhibits to this Agreement are hereby incorporated in this
Agreement and shall be deemed and construed to be a part of this Agreement for
all purposes.
SECTION 9.13 INTERPRETATION.
The words "include," "includes" and "including" when used herein shall
be deemed in each case to be followed by the words "without limitation." The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
[SIGNATURES ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.
EPHONE TELECOM, INC.
By: /s/ Carmine Taglialatela
Name: Carmine Taglialatela
Title: Chief Executive Officer
EPHONE MERGER CORP.
By: /s/ Carmine Taglialatela
Name: Carmine Taglialatela
Title: President
CHAMPION TELEPORT, INC.
By: /s/ Mahmoud Wahba
Name: Mahmoud Wahba
Title: President
24
EXHIBIT A
CERTIFICATE OF MERGER
of
CHAMPION TELEPORT, INC.,
(a Delaware corporation)
WITH AND INTO
EPHONE MERGER CORP
(a Delaware corporation)
(UNDER SECTION 251 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE)
EPHONE MERGER CORP., a Delaware corporation, hereby certifies that:
1. The name and state of incorporation of each of the constituent entities
is:
(i) EPHONE MERGER CORP., a Delaware corporation ("EPHONE"); and
(ii) CHAMPION TELEPORT, INC., a Delaware corporation ("CHAMPION").
2. An Agreement and Plan of Merger was duly approved, adopted, certified,
executed and acknowledged by EPHONE, CHAMPION, ePhone Telecom, Inc.,
the parent company of which EPHONE is a wholly-owned subsidiary, in
accordance with the provisions of Section 251 of the General
Corporation Law of the State of Delaware, to wit, by EPHONE and by
CHAMPION.
3. The name of the surviving corporation in the merger is EPHONE MERGER
CORP., which will continue its existence as said surviving corporation
upon the effective date of said merger pursuant to the provisions of
the General Corporation Law of the State of Delaware.
4. The Certificate of Incorporation as currently in effect of EPHONE shall
subsequent to the merger be the Certificate of Incorporation of EPHONE,
as the surviving corporation, unless and until duly amended in
accordance with the provisions hereof and applicable law.
5. The executed Agreement and Plan of Merger is on file at the principal
place of business of EPHONE, located at 66 Hawley Road, Oxford,
Connecticut 06478.
6. A copy of the Agreement and Plan of Merger will be furnished by the
surviving corporation, on request, and without cost, to any stockholder
of each of the constituent corporations in the merger.
IN WITNESS WHEREOF, the duly authorized officer of EPHONE is executing the
Certificate of Merger on the 5th day of August, 2003.
EPHONE MERGER CORP.
a Delaware corporation
By: /s/ Carmine Taglialatela
-------------------------
Name: Carmine Taglialatela
Title: President