AGREEMENT FOR SALE AND PURCHASE
OF BUSINESS ASSETS
DATE: JANUARY 2, 1997
PARTIES: TELCO WEST, INC.
AN OREGON CORPORATION ("SELLER")
00000 X.X. Xxxxx Xxxxxx Xxxxx Xx.
Xxxx Xxxxxx, Xxxxxx 00000
INTELLIPHONE, INC.
a Minnesota corporation ("Buyer")
0000 Xxxxxxx Xxxx.
Xx. Xxxxx Xxxx, Xxxxxxxxx 00000
RECITALS:
A. Seller operates a business primarily engaged in providing and
servicing public pay telephones in several Western states. Seller owns
equipment, contract rights, leasehold interests, tools, inventories, account
receivables, operating accounts, prepaid insurance, advertising and sales
materials and miscellaneous assets used in connection with the operation of its
business.
B. Buyer desires to acquire site contracts for 1,019 payphones
located in the Colorado, Idaho, Oregon, Washington and Wyoming and all
equipment located at the respective sites identified in Exhibit #1 and #2
hereto together with all telephones, computer boards, telephone enclosures,
cash contents of the pay telephone at 11:59 p.m. on January 1, 1997, permits,
contract rights and intangibles related thereto including all good will and
rights associated the potential continuation of the contracts after the
expiration of the term of the site agreement contracts and Seller desires to
sell all of such assets to Buyer.
AGREEMENT:
SECTION 1. ASSETS PURCHASED.
1.1 ASSETS PURCHASED. Seller agrees to sell to Buyer, and Buyer agrees
to purchase from Seller, on the terms and conditions set forth in this
Agreement, the following assets ("Assets"):
1.1.1 The option to purchase from Xxxxxxx Xxxxxx "Site Agreement" contents
and any modifications thereto described on Exhibit #1 attached hereto and made a
part hereof by reference, together with all equipment located at the sites
identified in the contracts, including telephones, computer boards used in
relation to the telephones, telephone enclosures, the cash contents of any pay
telephones at 11:59 p.m. upon January 1, 1997 , contract rights identified
therein and any intangibles related thereto. The options to purchase from
Xxxxxxx Xxxxxx shall be exercised by Buyer for the following consideration which
shall be paid in cash to Xxxxxxx Xxxxxx at closing:
Lease-Option Price to be Applicable Pre-Paid
Lease/Option Number Paid to Xxxxxxx Xxxxxx Sales Tax Property Taxes
------------------- ---------------------- ---------- --------------
07676001 - 000 $ 303,919.08 $ 8,076.24 $ 8,108.99
0747601 - 001 126,490.78 668.43 2,639.06
---------- -------- --------
Total $ 430,409.86 $ 8,744.67 $10,748.05
The sums stated above include sales tax applicable to the equipment
purchased by Buyer directly from Xxxxxxx Xxxxxx. Buyer shall pay to Xxxxxxx
Xxxxxx the applicable sales tax and pre-paid property taxes as stated above.
Seller guarantees delivery unto Buyer of title to the "Site Agreement" contents
and equipment by Xxxxxxx Xxxxxx.
1.1.2 All of the Seller's right, title and interest in the "Site
Agreement" contracts and any modifications thereto described on Exhibit #2
attached hereto and made a part hereof by reference, together with all equipment
located at the sites identified in the contracts, including telephones, computer
boards used in relation to the telephones, telephone enclosures, the cash
contents of any pay telephones at 11:59 p.m. upon January 1, 1997 , contract
rights identified therein and any intangibles related thereto.
1.1.3 Seller represents that there are not less than 1,019 pay telephones
with "Site Agreements" which are being purchased by buyer either directly from
Seller or by exercise of the option to purchase conveyed by Seller to Buyer. In
the event the number of pay telephones is less than 1015 at closing, the
purchase price set forth herein will be reduced accordingly at the rate of $3300
per pay telephone not delivered. Further, during the two year period following
closing, if any of the approximately 32 telephones located in various "Shari's"
restaurants are removed (which notice of intent has been given to Seller), then
the purchase price due hereunder shall be further reduced at the rate of $2,000
for each telephone reduced in the first year and $1,000 for each phone removed
in the second year. Buyer may deduct any amounts due to such removals from the
next monthly payment due to Seller under the promissory note described at
Section 3.2.1. Except for the "Shari's" restaurant locations there shall be no
reduction for cancellation of any "Site Agreements" if at lease 1015 pay
telephones were delivered upon the date of closing.
1.1.4 All manuals, warranties, sales materials and telephone books at the
identified sites.
1.1.5 All inventories of Seller's pay telephone equipment, computer
systems related only to pay telephones, spare parts, materials and supplies used
by Seller in the ordinary course of Seller's business to maintain, service,
repair and replace the equipment located at the site locations identified in the
above paragraphs. Excluded from the equipment sold are 27 new telephone
enclosures, the new copier, fax machine and equipment associated with Seller's
presubscription or hotel/motel business.
1.1.6 Seller's goodwill for pay telephone operations within the states
identified at B. above, and all files or other business records to handle
accounts identified above.
1.1.7 All warranties, contract rights, claims, licenses, prepaid
insurance, and renewal rights, rights to receive income or to continue
contracts, options, grants and all assets of Seller associated with the
equipment listed on Exhibits #1 and #2 of whatever kind, whether known or
unknown (except as specifically excluded), are included as part of this sale.
1.1.8 Seven (7) pickup trucks described by year, make, model, V.I.N., and
location at the time of closing on Exhibit #3 attached hereto and as made a part
hereof by reference, all trucks are sold in "AS-IS" and "WHERE-IS" condition.
Buyer shall insure the trucks effective at 11:59 p.m. upon January 1, 1997 , at
which time, Seller will cancel insurance on said vehicles. Any refunds on
insurance shall belong to Seller.
1.1.9 The tradename "Telco Northwest" and any associated logos or
servicemarks except the trade name "Telco West".
1.1.10 Twenty-Five (25) uninstalled payphones.
1.2 EXCLUDED ASSETS. Excluded from this sale and purchase are other
telephone equipment and site location agreements owned by Seller and not listed
on Exhibits #1 and #2, all of Seller's accounts for hotel and motel long
distance telephones, all pre-subscription agreements for LEC-owned payphones
wherever located and Seller's accounts receivable, collected cash on hand, notes
receivable, prepaid accounts, and the following:
1.2.1 All of Seller's cash on hand, bank accounts and operational accounts
of January 1, 1997 , except for the cash deposited in all payphones being
purchased at 11:59 p.m. on January 1, 1997,
1.2.2 Any prepaid taxes (personal property taxes on equipment sold to be
pro rated at closing), tax deposits and prepaid rent,
1.2.3 No licenses or permits required to own and/or operate the equipment
are being purchased by the Buyer. Buyer shall be solely responsible for
obtaining all necessary permits and licenses as may be required to own and
operate the telephone equipment, however Seller agrees to cooperate and to
execute any documents which may be necessary to effect the transfer or
assignment of any permits and licenses required by regulatory or government
agencies.
1.2.4 Any claims for dial around compensation for Seller's pay telephones
in continuous operation prior to January 1, 1997.
1.2.5 Any proceeds on account of litigation brought by Seller against
Fearless Xxxxxx Stinker Stations, Inc. and/or Mountain Phone Company, Inc. in
the District Court for the State of Idaho, Ada County, Case #CVOC9604405D.
1.2.6 Office equipment and furnishings used by Seller in relation to
Seller's business in presubscription, hotel/motel business.
1.2.7 Any proceeds on account of litigation brought by Seller against U.S.
West in Federal District Court, Seattle, Washington, Case #C951622WD.
1.2.8 Any motor vehicles owned by Seller except those sold to Buyer and
identified in Exhibit #3.
SECTION 2. LIABILITIES ASSUMED AND NOT ASSUMED
2.1 BUYER'S LIABILITIES ASSUMED.
2.1.1 CONTRACT OBLIGATIONS. Buyer shall accept the assignment and assume
responsibility for the obligations of Seller under the contracts identified in
Section 1.1.1 and Section 1.1.2.
2.2 BUYER'S LIABILITIES NOT ASSUMED.
2.2.1 CORPORATE OBLIGATIONS. Notwithstanding that Buyer is acquiring the
trade name "Telco Northwest", it is not assuming any liabilities of Seller or
"Telco Northwest" except for those described at Section 2.1.1 above.
2.2.2 EMPLOYEES. Buyer shall have no responsibility to hire or pay any
employee or independent contractor of Seller compensation, sales commissions,
sick pay, retirement or other compensation, except, that if Buyer installs
telephones under contracts which have been assigned to Buyer, Buyer shall be
responsible for any commission due to any person by reason of said installation.
Should Buyer elect to hire former employees of Seller, Buyer shall be
responsible for any employment compensation offered by Buyer subsequent to
January 1, 1997 .
2.2.3 TRANSFER TAXES. Buyer shall pay to Seller at closing all transfer
taxes and sales taxes arising from this sale as follows:
State # of Telephones Tax Rate Tax
----- --------------- -------- ---
Oregon 51 0% $ 0
Washington 35 6.5% $ 6,015.10
Idaho 63 5.0% $ 8,328.60
Colorado 21 4.0% $ 2,220.96
Wyoming 3 6.0% $ 475.92
TOTAL $ 17,040.58
and upon collection of said taxes, Seller shall pay said sales and excise taxes
arising from this sale. Buyer acknowledges that all assets purchased herein
except otherwise identified are being purchased in Oregon for use within the
State of Oregon. Buyer shall pay to Xxxxxxx Xxxxxx the applicable excise and
sales taxes identified by Xxxxxxx Xxxxxx for equipment being purchased by Buyer
directly from Xxxxxxx Xxxxxx in exercise of the option to purchase identified in
section 1.1.1. Buyer shall reimburse Seller for prepaid
personal property taxes for equipment sold to Buyer in the sum of $442.50 to be
paid at closing.
2.2.4 LEASED OFFICE. Buyer has agreed to sublease from Seller
approximately 1/2 of the office space currently occupied by Seller at 00000 X.X.
Xxxxx Xxxxxx Xxxxx Xx., Xxxx Xxxxxx, Xxxxxx on a month-to-month basis for base
rent equal to one-half of the base rent paid by Seller to Seller's landlord.
Rent shall be paid in advance.
2.2.5 GENERAL LIMITS. Except as set forth herein Buyer shall not be
liable for any indebtedness of Seller. Buyer assumes no liabilities except as
stated above.
2.3 SELLER'S OBLIGATIONS.
2.3.2 INCOME TAXES. Seller shall pay any State, Federal or Local income
taxes of Seller after application of all loss carry forwards, credits,
deductions or other tax offsets available to Seller and shall be responsible for
the cost of preparation of said tax returns and for all accounting fees
associated with the preparation of said tax returns.
2.2.3 COMMISSIONS AND CONTRACT OBLIGATIONS PAYABLE. Seller shall remain
liable for and shall pay when due any and all obligations arising from payments
and/or commissions due to customers under the "Pay Telephone Agreements",
"Customer Service Agreements" and "Site Agreements" through January 1, 1997 and
shall further pay all telephone bills and the cost of long distance or other
telephone service charges calculated through January 1, 1997 . Buyer shall have
the right but not the obligation to cure any of Seller's defaults under such
agreements and to set off against its obligations under the note described at
Section 3.1.1 any amounts paid to so cure Seller's defaults.
SECTION 3. PURCHASE PRICE FOR ASSETS
The purchase price for the assets is Two Million Nine Hundred Thirty-Five
Thousand Five Hundred Ninety-Two and 00/100 Dollars ($2,935,592.00) plus
interest at the rate of 10% per annum from January 1, 1997 until paid plus
payment to Xxxxxxx Xxxxxx as the sum due to them to exercise Seller's option to
purchase the contracts and equipment as specified in Section 1.1.1. Security
deposits paid by Seller to Xxxxxxx Xxxxxx shall be returned to Seller and are
not included in the purchase price. Seller accepts the consideration as full
and sufficient consideration for the assets identified above. The purchase
price shall be paid upon execution of this Agreement at closing in the following
manner:
3.1 Upon the execution of this Agreement, Buyer shall pay Xxxxxxx Xxxxxx
the sum of $430,409.86 plus recalculated lease-option charges to update the
balance due from the January 1, 1997 calculation date to the date of payment
plus applicable sales tax in the sum of $8,744.67 plus pre-paid personal
property taxes in the sum of $10,748.05, all in relation to the leased
equipment. This sum is in addition to the purchase price agreed to above. Upon
closing, Buyer shall pay Xxxxxxx Xxxxxx the sum of $169,047.18 plus interest
to update the balance due from the January 1, 1997 calculation date to the date
of payment all to pay off a loan made by Xxxxxxx Xxxxxx to Seller under Loan
#000-00000-000 which sum shall be a credit toward the purchase price herein.
3.2 Upon the execution of this Agreement, Buyer shall issue a good and
sufficient check to Buyer in the sum of One Million, Five Hundred Sixty Thousand
Forty-Two and 96/100 Dollars ($1,560,042.96) plus interest at the rate of 10%
per annum from January 1, 1996 until paid.
3.2.1 At closing, Buyer shall deliver its promissory note in the form
attached hereto as Exhibit #4 in the principal face amount of $841,500 (or such
lesser face amount if less than 1,015 phones are purchased as set forth in
Section 1.1.1 above), bearing interest at the rate of 10% per annum, payable as
follows: six (6) monthly interest payments commencing February 2, 1997 of
$7,012.50 each followed by forty-eight (48) monthly payments of principal and
interest in the aggregate amount of $21,342.61 per month. The obligations
arising under the promissory note shall be secured by Buyer granting to Seller a
security interest in all telephones owned by Buyer, except for any phones
presently located in and on Indian-owned gaming casino property as identified in
exhibit "7". The security interest shall be subordinate to the first lien
security position held by Buyer's primary lender, National City Bank,
Minneapolis, MN. or their assigns in an amount not to exceed $3,000,000. At
such time as the remaining unpaid principal balance due on the promissory note
is reduced to an amount less than $420,000, and if all sums have been paid on
the Note identified in Section 3.2.2 herein, then Seller will release its
security interest in all telephones owned by Buyer other than those acquired by
Buyer from Seller under this Agreement. The Security Agreements, attached
hereto as Exhibit #5 and Exhibit #5(a), giving rise to the security interest
described hereunder, will be executed by the parties hereto at closing.
3.2.2 Buyer also shall deliver an additional promissory note in the form
attached as Exhibit #4(a) in the principal face amount of Three Hundred Sixty
Five Thousand ($365,000), bearing interest at the rate of ten percent (10%) per
annum. Interest only at the rate of $3,042 per month shall commence on February
1, 1997 and continue monthly until April 1, 1998 when the entire principal
amount will be due. This promissory note shall also be secured pursuant to the
Security Agreements described in Section 3.2.1 above.
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3.3 The purchase price allocations shall be as follows:
ITEM PURCHASED LOCATION PURCHASE PRICE ALLOCATION
-------------- -------- -------------------------
Xxxxxxx Xxxxxx
Lease - Option Oregon $2,363,180.00
Vehicles Oregon $ 37,000.00
Office Equipment Oregon $ 10,000.00
Inventory & Supplies Oregon $ 53,000.00
Non-Competition Agree Oregon $ 10,000.00
Goodwill Oregon $ 5,000.00
Telephones per 2.2.3 Oregon $ 134,844.00
Telephones per 2.2.3 Wash. $ 92,540.00
Telephones per 2.2.3 Idaho $ 166,572.00
Telephones per 2.2.3 Colorado $ 55,524.00
Telephones per 2.2.3 Wyoming $ 7,932.00
TOTAL $2,935,592.00
SECTION 4. ADJUSTMENTS
The operation of telephone equipment identified on Exhibits #1 and #2 and
related income and expenses up to 11:59 p.m. on January 1, 1997, shall be for
the account of Seller and thereafter for the account of Buyer. Seller shall pay
all expenses of the equipment through January 1, 1997 , including but not
limited to site commissions, utilities, advertising, personal property taxes,
rents and lease payments, real property taxes, wages, and payroll taxes of
Seller. Buyer shall pay all expenses of the equipment after January 1, 1997,
including but not limited to site commissions, utilities, advertising, payroll
for employees of Seller who directly service said equipment including all
applicable benefits, workers compensation premiums, insurance, withholding taxes
and related charges. Cash from the telephones will be calculated electronically
on 11:59 p.m. (local time in each location) on January 1, 1997 and any cash in
the telephones thereafter shall belong to the Buyer. In addition to the
purchase price, Buyer shall pay to Seller any
personal property tax that Seller has paid on the pay telephone equipment pro
rated through January 1, 1997.
SECTION 5. OTHER AGREEMENTS
5.1 NON-COMPETE AGREEMENT. Seller, Buyer and Xxxxx Xxxxx will enter into
an Agreement prohibiting certain competition by Seller and Xxxxx Xxxxx without
the prior consent of Buyer.
5.2 ASSIGNMENT OF CONTRACTS. Seller shall execute and deliver at closing
separate assignments of the Pay Telephone Agreements and Telephone Site
Agreements and after closing any additional documentation as may be requested by
Buyer it being the intention of the parties hereto that Seller shall cooperate
as is hereinafter necessary to perfect the Buyer's interest in all assets
purchased hereunder and that the obligations of Seller to execute assignments of
said contracts shall survive the closing.
SECTION 6. COLLECTION OF SELLER'S ACCOUNTS RECEIVABLE.
Seller shall take such action as is necessary to collect accounts
receivable due to Seller on account of telephone services provided prior to
January 1, 1997 . Buyer shall cooperate with seller as is necessary to provide
Seller with information from the files purchased by Buyer in order for Seller to
collect the accounts receivable. All commissions due to site owners prorated as
11:59 p.m. on January 1, 1997 shall be paid by Seller.
SECTION 7. SELLER'S REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Buyer as follows:
7.1 CORPORATE EXISTENCE. Seller represents that Telco West, Inc. is an
Oregon corporation duly organized and validly existing and in good standing and
is authorized to transact business in the state of Oregon and such other states
as the nature of its business requires it to be duly qualified to transact
business therein. Seller has all requisite power and authority to own, operate
and/or lease the assets, as the case may be, and to carry on its business as now
being conducted.
7.2 AUTHORIZATION. The execution, delivery and performance of this
Agreement have been duly authorized and approved by the Board of Directors and
the requisite number of the shareholders of Seller, the lawful owner of all the
assets described herein, that no further approval for sale and transfer of the
assets to Buyer is required and this Agreement constitutes a valid and binding
Agreement of Seller in accordance with its terms.
7.3 FINANCIAL STATEMENTS. Seller has delivered to Buyer a list of site
revenues through September 30, 1996. To the best of Seller's knowledge the site
revenues are in accordance with the books and records of Seller and are true,
correct, and complete.
7.4 TITLE TO ASSETS. Seller holds good and marketable title to the
Assets, free and clear of restrictions on or conditions to transfer or
assignment, and free and clear of liens, pledges, charges, or encumbrances
except as described on Exhibit #5 attached hereto and made in part hereof by
reference. Buyer is under no obligations whatsoever to use operator service
providers or long distance providers previously used by Seller and Seller agrees
to indemnify Buyer from any and all claims of any person who may claim a right,
title or interest in the assets transferred by this agreement.
7.5 BROKERS AND FINDERS. Seller has not employed a broker or finder in
connection with the transactions contemplated by this Agreement, or taken any
action that would give rise to a valid claim against Buyer or any party for a
brokerage commission, finder's fee, or other like payment.
7.6 TRANSFER NOT SUBJECT TO ENCUMBRANCES OR THIRD-PARTY APPROVAL. The
execution and delivery of this Agreement by Seller, and the consummation of the
contemplated transactions, will not result in the creation or imposition of any
valid lien, charge, or encumbrance on any of the Assets by any person, and will
not require the authorization, consent, or approval of any third party,
including any governmental subdivision, court or regulatory agency.
7.7 LABOR AGREEMENTS AND DISPUTES. Seller is neither a party to, nor
otherwise subject to any collective bargaining or other agreement governing the
wages, hours, and terms of employment of Seller's employees. Seller is not
aware of any labor dispute or labor trouble involving employees of Seller, nor
has there been any such dispute or trouble during the three years preceding the
date of this Agreement.
7.8 NONCANCELABLE CONTRACTS. At the time of closing, there will be no
material leases, employment contracts, contracts for services or maintenance, or
other similar contracts existing or relating to or connected with the operation
of Seller's business not cancelable within 30 days, except the telephone site
agreements.
7.9 LITIGATION. Seller has no knowledge of any claim, litigation,
proceeding, or investigation pending or threatened against Seller that might
result in any material adverse change in the business or condition of the Assets
being conveyed under this Agreement. Buyer has been advised concerning the
status of Seller's suit against Fearless Xxxxxx Stinker Stations, Ada County,
Idaho, Case #CVOC9604405D which may effect continuation of not more than
three(3) pay telephones and related contracts with the defendant therein.
/ / /
7.10 NO MATERIAL ADVERSE CHANGE. Since December 3, 1996 there has not
been an adverse change in any of the assets or in the business in which the
assets are employed except as described on Exhibit 6 attached hereto and made a
part hereof by reference.
7.11 ACCURACY OF REPRESENTATIONS AND WARRANTIES. None of the
representations or warranties of Seller contain or will contain any untrue
statement of a material fact or omit or will omit or misstate a material fact
necessary in order to make statements in this Agreement not misleading. Seller
knows of no fact that has resulted, or that in the reasonable judgment of Seller
will result in a material change in the business, operations, or assets of
Seller that has not been set forth in this Agreement or otherwise disclosed to
Buyer.
7.12 SELLER'S OPERATION OF BUSINESS PRIOR TO CLOSING. Seller represents
that between December 3, 1996 and the closing date, Seller has: (a) operated the
business that in the usual and ordinary course and in substantial conformity
will all applicable laws, ordinances, regulation, rules, or orders, and has used
its best efforts to preserve its business organization and preserve the
continued operation of its business with its customers, suppliers, and others
having business relations with Seller and b) not assigned, sold, leased, or
otherwise transferred or disposed of any of the assets used in the performance
of its business, whether now owned or hereafter acquired, except in the normal
and ordinary course of business and in connection with its normal operation.
SECTION 8. COVENANTS OF SELLER
8.1 EMPLOYEE MATTERS
8.1.1 Seller has delivered to Buyer a list of the names and addresses of
all persons on the payroll of Seller having information concerning the site
agreements transferred to Buyer which list is satisfactory to Buyer. Seller
represents that seller is unaware of any person who has confidential
information concerning the site agreements that would assist that person in
interfering with the contract rights being assigned.
8.2 CONDITIONS AND BEST EFFORTS. Seller will use their best efforts to
effectuate the transactions contemplated by this Agreement and to fulfill all
the conditions and obligations of Seller under this Agreement, and will do all
acts and things as may be required to carry out their respective obligations
under this Agreement and to consummate and complete this Agreement. Seller
agrees to execute such additional documents as may be required to transfer all
assets identified by this Agreement.
SECTION 9. COVENANTS OF BUYER
9.1 CONDITIONS AND BEST EFFORTS. Buyer will use its best efforts to
effectuate the transactions contemplated by this Agreement and to fulfill all
the conditions of Buyer's obligations under this Agreement.
9.2 CONFIDENTIAL INFORMATION. If for any reason the sale of Assets is
not closed, Buyer will not disclose to third parties any confidential
information received from Seller in the course of investigating, negotiating,
and performing the transactions contemplated by this Agreement.
SECTION 10. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The obligation of
Buyer to purchase the Assets is subject to the fulfillment, before or at the
closing date, of each of the following conditions, any one or portion of which
may be waived in writing by Buyer:
10.1 REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER. All
representations and warranties made in this Agreement by Seller shall be true as
of the closing date as fully as though such representations and warranties had
been made on and as of the closing date, and, as of the closing date, neither
Seller nor Selling Shareholders shall have violated or shall have failed to
perform in accordance with any covenant contained in this Agreement.
10.2 CONDITIONS OF THE BUSINESS. There shall have been no material
adverse change in the manner of operation of Seller's business before the
closing date.
10.3 NO SUITS OR ACTIONS. At the closing date no suit, action, or other
proceeding shall have been threatened or instituted to restrain, enjoin, or
otherwise prevent the consummation of this Agreement or the contemplated
transactions.
10.4 FINANCING. Buyer has arranged for financing (other than the Notes to
be delivered to Seller by Buyer) on terms and conditions deemed acceptable to
Buyer in its sole discretion and Buyer has obtained an enforceable commitment to
lend from such lender.
SECTION 11. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
11.1 Buyer must provide Seller with satisfactory personally guarantees
from Buyer's shareholders to secure the obligations of Buyer as set forth
herein.
11.2 Buyer must provide Seller with a form of Subordination Agreement that
is reasonably acceptable to Seller and to Buyer's primary lender.
SECTION 12. BUYER'S ACCEPTANCE
Buyer represents and acknowledges that it has entered into this Agreement
on the basis of its own examination, personal knowledge, and opinion of the
value of the business. Buyer has not relied on any representations made by
Seller other than those specified in this Agreement. Buyer further acknowledges
that Seller has made no agreement or promise to repair or improve any of the
leasehold improvements, equipment, or other personal property being sold to
Buyer under this Agreement, and that Buyer takes all such property in the
condition existing on the date of this Agreement, "AS IS" and "WHERE IS".
/ / /
SECTION 13. RISK OF LOSS
The risk of loss, damage, or destruction to any of the equipment,
inventory, or other personal property to be conveyed to Buyer under this
Agreement shall be borne by Seller until January 1, 1997 and thereafter the risk
of loss shall be born by the Buyer. In the event of such loss, damage, or
destruction, Seller, to the extent reasonable, shall replace the lost property
or repair or cause to repair the damaged property to its condition prior to the
damage. If replacement, repairs, or restorations are not completed prior to
January 1, 1997, then the purchase price shall be adjusted by an amount agreed
upon by Buyer and Seller that will be required to complete the replacement,
repair, or restoration following closing. If Buyer and Seller are unable to
agree, then Buyer, at its sole option and notwithstanding any other provision of
this Agreement, upon notice to Seller, may rescind this Agreement and declare
it to be of no further force and effect, in which event there shall be no
closing of this Agreement and all the terms and provisions of this Agreement
shall be deemed null and void.
SECTION 14. INDEMNIFICATION AND SURVIVAL
14.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made in this Agreement shall survive the closing of this Agreement,
except that any party to whom a representation or warranty has been made in this
Agreement shall be deemed to have waived any misrepresentation or breach of
representation or warranty of which such party had knowledge prior to closing.
Any party learning of a misrepresentation or breach of representation or
warranty under this Agreement shall immediately give written notice thereof to
all other parties to this Agreement. The representations and warranties in this
Agreement shall terminate one year from the closing date, and such
representations or warranties shall thereafter be without force or effect,
except any claim with respect to which notice has been given to the party to be
charged prior to such expiration date.
14.2 SELLER'S INDEMNIFICATION.
14.2.1 Seller agrees to indemnify and hold Buyer, its successors, and
assigns harmless from and against:
(1) Any and all claims, liabilities, and obligations of every kind and
description, contingent or otherwise, arising out of or related to the operation
of Seller's business assets prior to the close of business on the closing date,
except for claims, liabilities, and obligations of Seller expressly assumed by
Buyer under this Agreement or paid by insurance maintained by Seller or Buyer.
(2) Any and all damage or deficiency resulting from any material
misrepresentation, on the part of Seller or their authorized representatives
under this Agreement.
(3) Any and all claims by shareholders of Seller arising from this sale of
assets.
(4) Any and all claims of creditors of Seller if said creditor liabilities
were not expressly assumed by Buyer under Section 2 of this agreement.
14.2.2 Seller's indemnity obligations under Section 15.2.1 shall be subject
to the following:
(1) If any claim is asserted against Buyer that would give rise to a claim
by Buyer against Seller for indemnification under the provisions of this
paragraph, then Buyer shall promptly give written notice to Seller concerning
such claim and Seller shall, at no expense to Buyer, defend the claim.
14.3 BUYER'S INDEMNIFICATION. Buyer agrees to defend, indemnify, and
hold harmless Seller from and against:
14.3.1 Any and all claims, liabilities, and obligations of every kind and
description arising out of or related to the operation of the business following
closing or arising out of Buyer's failure to perform obligations of Seller
assumed by Buyer pursuant to Section 2 of this Agreement.
14.3.2 Any and all damage or deficiency resulting from any material
misrepresentation, breach of warranty or covenant, or nonfulfillment of any
agreement on the part of Buyer under this Agreement.
14.3.3 Any and all claims arising from any occurrence subsequent to January
1, 1997 by owners under "Pay Telephone Agreements" and/or "Customer Service
Agreement & Letter of Agency" contracts, which agreements have been assigned to
Buyer.
SECTION 15. CLOSING
15.1 TIME AND PLACE. This Agreement shall be closed in Portland, Oregon
the 6th day of January, 1997, or at such other time as the parties may agree in
writing.
15.2 OBLIGATIONS OF SELLER AT THE CLOSING. At the closing and
coincidentally with the performance by Buyer of its obligations described
herein, Seller shall deliver to Buyer the following:
15.2.1 Bills of sale in the form of Exhibit #1 and #2 hereto,
assignments, properly endorsed certificates of title, and other instruments
of transfer, in form and substance reasonably satisfactory to Buyer,
necessary to transfer and convey all of the Assets to Buyer as well as
physical possession of the assets identified herein, free and clear of all
liens, security interests and encumbrances.
15.2.2 Transfer of all licenses and permits to transacts business of the
Seller and transfer of the assumed business name of Seller.
15.2.3 Such other certificates and documents as may be contemplated by the
provisions of this Agreement, including a board resolution of Seller's board of
directors authorizing this transaction.
15.3 OBLIGATIONS OF BUYER AT THE CLOSING. At the closing and
coincidentally with the performance by Seller of their obligations described in
Section 16.2, Buyer shall deliver to Seller the following:
15.3.1 A good and sufficient check or wire transfer in the amount specified
herein as partial consideration for this transfer.
15.3.2 Original Promissory Notes as identified in Sections 3.1.1 and 3.1.2,
Security Agreements and Financing Statements.
15.3.3 Such other certificates and documents as may be contemplated by the
provisions of this Agreement.
SECTION 16. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING
16.1 BOOKS AND RECORDS. This sale does not include the books and records
of Seller's business, except those records relating to the sellers accounts with
customers identified in the contracts being sold.
16.2 SELLER'S RIGHT TO PAY. In the event Buyer fails to make any payment
of taxes, assessments, or other charges that Buyer is required to pay to third
parties under this Agreement, Seller shall have the right, but not the
obligation, to pay the same. Buyer will reimburse Seller for any such payment
immediately upon Seller's demand. Any such payment by Seller shall not
constitute a waiver by Seller of any remedy available by reason of Buyer's
default for failure to make the payments.
16.3 BUYERS'S RIGHT TO PAY. In the event Seller failed to make any
payment of taxes, assessments or other charges that Seller is required to pay to
third parties (including but not limited to payments that are due to creditors
of Seller which in any way affect the use or ownership of the property
transferred hereunder) under this Agreement, Buyer shall have the right, but not
the obligation, to pay the same. Seller and/or Selling Shareholder's will
reimburse Buyer for any such payment immediately upon Buyer's demand. Further,
Buyer may withhold payments due under the Installment Collateral Note in the
amount paid by Buyer to satisfy Seller's obligations. Any such payment by Buyer
shall not constitute a waiver by Buyer of any remedy available by reason of
Seller's default for failure to make the payments.
SECTION 17. BULK SALES LAW
Buyer waives compliance by Seller with the any Bulk Transfer Act. Except
for those liabilities assumed by Buyer, as provided herein, in the event any
creditor of Seller claims the benefit of the Bulk Transfer Laws as against Buyer
or any of the assets being conveyed to Buyer under this Agreement, Seller shall
immediately pay or otherwise satisfy such claim or undertake its defense.
Seller shall indemnify and hold Buyer harmless from and against any and all
loss, expense, or damage resulting from the failure to comply with any Bulk
Transfer Law. If Seller fails to comply with the provisions of this Section 15
and Buyer is required to pay any creditor of Seller in order to protect the
property purchased under this Agreement from claims or liens of Seller's
creditors, except those assumed by Buyer, then Buyer may offset the amount it
pays against any sum due Seller under this agreement by furnishing proof of such
payment in the form of a receipt from the creditor involved and/or demand
payment and file an action to enforce the terms of this agreement.
SECTION 18. COVENANT NOT-TO-COMPETE.
In further consideration of the transactions contemplated by this
agreement, at closing Seller and Xxxxx Xxxxx shall enter into the form of
Non-Compete Agreement attached hereto as Exhibit #9 and made a part hereof by
reference. In consideration of the granting of this covenant not-to-compete,
the parties hereto agree to allocate $10,000.00 of the aggregate purchase price
to such covenant.
SECTION 19. MISCELLANEOUS PROVISIONS
19.1 PUBLIC DISCLOSURES. Neither Seller nor Buyer shall disclose the sale
of the assets in any press release or other public announcement without the
prior written consent of the other parties, which consent shall not be
unreasonably withheld.
19.2 EXPENSES. Whether or not the closing occurs, each party hereto shall
pay its own expenses in connection with his agreement.
19.3 NOTICES. Any notice, demand or communication required or permitted by
this agreement shall be in writing and shall be delivered by hand or by U.S.
mail, first class certified mail, postage prepaid, return-receipt requested and
addressed to the parties at their respective addresses set forth at page one of
this agreement. Either party may changes its address for notice purposes by
providing notice in accordance with his provision. Any notice, demand or other
communication shall be deemed given and effective as of the date of delivery by
hand, or upon the firth day following mailing.
19.4 HEADINGS. The headings and titles to the Sections and subparagraphs
of this agreement are inserted for convenience only, and shall not be deemed to
be a part of the Agreement nor affect the construction or interpretation of any
provision of the Agreement.
19.5 MODIFICATIONS AND WAIVERS. No modification or amendment of any
provision of this Agreement shall be effective for any purpose unless set forth
in a writing signed by the party of parties to be bound thereby. The waiver by
any party of any right or remedy under this Agreement on any one occasion shall
not be deemed a waiver of such right or remedy on any subsequent occasion.
19.6 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
19.7 BINDING EFFECT. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective heirs, personal representatives,
successors and assigns of the parties.
19.8 ENTIRE AGREEMENT. This Agreement and the exhibits to this Agreement
set forth the entire understanding of the parties with respect to the subject
matter hereof and supersedes all existing
agreements between the parties with respect to such subject matter including
without limiting the foregoing, the letter agreement between the parties hereto
concerning the subject matter hereof dated December 3, 1996.
19.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
19.10 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the state of Oregon.
19.11 VENUE. This Agreement has been made entirely within the state of
Oregon. This Agreement shall be governed by and construed in accordance with
the laws of the state of Oregon. If any suit or action is filed by any party to
enforce this Agreement or otherwise with respect to the subject matter of this
Agreement, venue shall be in the federal or state courts in Oregon, Multnomah
County, Oregon.
DATED this 2nd day of January, 1997.
SELLER: --------------------------------------------------------
Telco West, Inc., an Oregon corporation
By /s/ Xxxxx X. Xxxxx, Treasurer
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Xxxxx Xxxxx Treasurer
BUYER: --------------------------------------------------------
Intelliphone, Inc., a Minnesota corporation
By /s/ Xxxxxxx Xxxxxx, President
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