Communications World International, Inc.
Form 10-SB
Exhibit 2 (e)
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of the
____ day of December, 1998, by and between COMMUNICATIONS WORLD INTERNATIONAL,
INC., a Colorado corporation ("CommWorld"), COMMWORLD OF PHOENIX, INC., an
Arizona corporation ("Seller"), XXXX XXXXX ("Xxxxx"), and DIGITAL VOICE AND
DATA, INC., an Arizona corporation ("Purchaser").
R E C I T A L S:
- - - - - - - -
WHEREAS, Seller desires to transfer and sell, and Purchaser desires to
purchase and acquire, substantially all of Seller's assets relating to the
operation of Seller's interconnect business operated in Tucson, Arizona (the
"Business");
WHEREAS, Seller is the wholly-owned subsidiary of CommWorld and Heath is
the sole director, officer and shareholder of Purchaser; and
WHEREAS, Seller, CommWorld, Heath and Purchaser desire to enter into this
Agreement in order to set forth the terms and conditions of such transaction;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
---------------------------
1.01 Purchase And Sale. Seller hereby agrees to sell, assign, transfer
-----------------
and convey to Purchaser, and Purchaser hereby agrees to purchase, accept and
acquire from Seller, subject to the terms and conditions contained herein, the
following described real and personal property (collectively referred to as the
"Acquired Assets"):
(a) Real Property Lease. All of Seller's right, title and interest in
-------------------
and to the real property lease, including, without limitation, all leasehold
improvements and security deposits with respect thereto, listed and described on
Schedule 1.01(a) attached hereto (the "Real Property Lease").
----------------
(b) Books, Records and Written Materials. All books of account,
------------------------------------
records, files, invoices, customer lists, supplier lists, promotional and
advertising materials, catalogs, brochures, manuals and handbooks and other
similar data reduced to writing or other storage media, but only to the extent
that same are used by Seller exclusively in connection with the
ASSET PURCHASE AGREEMENT - Page 1
------------------------
operations of the Business and located within the leased premises that are the
subject of the Real Property Lease (the "Leased Premises") (the "Books and
Records").
(c) Personal Property Leases. All of Seller's right, title and
------------------------
interest in and to those personal property leases described on Schedule 1.01(c)
----------------
attached hereto (the "Personal Property Leases").
(d) Acquired Contracts. All rights and benefits of Seller in, to or
------------------
under those agreements, contracts and purchase orders listed or described on
Schedule 1.01(d) attached hereto (the "Acquired Contracts").
----------------
(e) Personal Property. All of Seller's right, title and interest
-----------------
in the tools, equipment, trade fixtures, furniture and other personal property
located within the Leased Premises (the "Personal Property").
(f) Software. All of Seller's right, title and interest in the
--------
software used by Seller exclusively with respect to the Business, as listed or
described on Schedule 1.01(f), attached hereto (the "Software").
----------------
(g) Inventory. THIRTY THOUSAND AND NO/100 DOLLARS ($30,000.00) of
---------
inventory selected by Purchaser (based upon the book value thereof).
1.02 Retained Assets. Notwithstanding anything contained hereunto the
---------------
contrary, Seller shall, and hereby does, expressly retain all of Seller's right,
title and interest in and to all of Seller's assets, properties, rights and
interests, other than the Acquired Assets expressly and specifically described
above (the "Retained Assets"), including, without, limitation, Seller's: (a)
accounts receivables, (b) inventory not selected by Purchaser pursuant to
Section 1.01(g) above, (c) all of Seller's right, title and interest in the
service marks and related logos, whether or not registered, and all goodwill
associated therewith, used in connection with this Business; (d) all of Seller's
right, title and interest in and to all of Seller's cash and cash equivalents in
place at Closing; and (e) any liabilities of the Tucson Business not
specifically assumed by Purchaser.
1.03 Assignability and Consents. To the extent that the consummation of
--------------------------
the transactions contemplated herein or the assignment of any of the Acquired
Contracts, the Real Property Lease or the Personal Property Leases shall require
the consent or waiver of any third party or any federal, state, county, parish,
local or foreign governmental entity or municipality or subdivision thereof or
any authority, arbitrator, department, commission, board, bureau, body, agency,
court or instrumentality thereof (each, a "Governmental Authority"), Seller
shall use all reasonable efforts to obtain the consent or waiver of each such
third party or Governmental Authority (each, a "Required Consent") to the
assignment thereof on or prior to the Closing Date, but the failure of Seller to
obtain any Required Consent shall not enable Purchaser to terminate this
Agreement.
1.04 Assumed Liabilities and Obligations. On the Closing Date, Purchaser
-----------------------------------
shall assume, and agrees to pay, perform and discharge as and when due, all of
the obligations and
ASSET PURCHASE AGREEMENT - Page 2
------------------------
liabilities of Seller based upon events occurring on or after the Closing Date
under (a) the Real Property Lease, (b) the Personal Property Leases, and (c) the
Acquired Contracts. All of the foregoing to be assumed by Purchaser hereunder
are collectively referred to as the "Assumed Liabilities."
1.05 Retained Liabilities and Obligations. Notwithstanding any other
------------------------------------
provision of this Agreement or doctrine of law to the contrary, Seller shall
retain, and Purchaser shall not assume or be liable with respect to, any
liability or obligation of Seller, except for the Assumed Liabilities. All of
the foregoing obligations and liabilities to be retained by Seller hereunder are
collectively referred to as the "Retained Liabilities." The Retained Liabilities
shall expressly include any liabilities of the Business associated with Toshiba
co-op funds and the Tadiran accounts.
1.06 Schedules. All references in this Agreement to "Schedules" shall
---------
mean the disclosure Schedules identified in this Agreement, which are
incorporated herein and shall be deemed a part of this Agreement for all
purposes. The disclosure of an item in a Schedule or under a heading in a
Schedule corresponding to a particular section or subsection of this Agreement
shall also be deemed a disclosure under (a) any other item of such Schedule, (b)
any other Schedules, and (c) any other section or subsection thereof. Provided
Seller complies with Section 5.01 hereof, Seller shall be permitted to amend
and/or supplement the Schedules as Seller deems necessary. Seller shall provide
written notice (including a copy of the amended Schedule as affected thereby) of
any such change as soon as practicable after Seller obtains actual knowledge of
any such event. In the event Seller notifies Purchaser in writing that an
amendment and/or supplement to a Schedule is necessary, (a) Purchaser shall have
the termination rights provided in Section 10.01(b) hereof, and (b) provided
that Purchaser fails to exercise such termination rights within three (3) days
after Purchaser's receipt of such notice, Purchaser's termination rights with
respect to such Schedule amendment and/or supplement shall terminate and
Purchaser shall be deemed to have irrevocably accepted same.
ARTICLE II
PURCHASE PRICE
--------------
2.01 Purchase Price. In consideration for the Acquired Assets, at
--------------
Closing, Purchaser shall (a) assume the Assumed Liabilities, and (b) pay to
Seller a total of EIGHTY-EIGHT THOUSAND TWO HUNDRED FIFTY AND NO/100 DOLLARS
($88,250.00) (the "Purchase Price"). The Purchase Price shall consist of (a)
83,500 shares of Series G Preferred Stock, $1.00 par value per share, of
CommWorld, including any accumulated dividends thereon (the "Series G Stock"),
standing in the name of Heath on the books of CommWorld and represented by stock
certificate number ____ (for purposes of the Agreement the Series G Stock shall
be valued at $0.50 per share); and (b) 93,000 shares of Series F Preferred
Stock, $1.00 par value per share, of CommWorld, including any accumulated
dividends thereon (the "Series F Stock"), standing in the name of Heath on the
books of CommWorld and represented by stock certificate number ____ (for
purposes of this Agreement, the Series F Stock shall be valued at $0.50 per
share).
ASSET PURCHASE AGREEMENT - Page 3
------------------------
2.02 Removal of Inventory. Seller and CommWorld shall be permitted, for a
--------------------
period of thirty (30) days after Closing, to remove from the Leased Premises any
inventory of Seller located in the Leased Premises that is not selected by
Purchaser. Upon prior notice to Purchaser, Purchaser shall provide Seller and
CommWorld with reasonable access to the Leased Premises for the purposes of
removing said inventory. Purchaser shall use reasonable efforts to safeguard
Seller's inventory until it is removed by Seller and to keep Seller's inventory
segregated from Purchaser's inventory.
2.03 Allocation of Purchase Price. The Purchase Price and the Assumed
----------------------------
Liabilities represent the amount agreed upon by the parties to be the value of
the Acquired Assets, it being further agreed that the Purchase Price and the
Assumed Liabilities shall be allocated among the Acquired Assets as the parties
may mutually agree in writing. Purchaser and Seller shall enter into such a
mutual written agreement within a reasonable period of time after the Closing
Date and (a) report the purchase and sale of the Acquired Assets in accordance
with such mutually agreed allocation, if any, for all federal, foreign, state
and local tax purposes, and (b) file Internal Revenue Service Form 8594 pursuant
to Section 1060 of the Internal Revenue Code of 1986, as amended. If Purchaser
and Seller do not enter into such a mutual written agreement within ninety (90)
days after the Closing Date, both Purchaser and Seller shall have complete
discretion in reporting such allocation.
ARTICLE III
CLOSING
-------
3.01 Closing. The closing of the transactions contemplated in this
-------
Agreement ("Closing") shall occur at the offices of CommWorld located at 0000
Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000, on December ______, 1998, or
such other date as the parties shall mutually agree (the "Closing Date").
Notwithstanding anything contained herein to the contrary, if the conditions to
Closing contemplated in Article VIII hereof have not occurred on or prior to the
scheduled Closing Date, either party shall have the right to extend the Closing
Date for a period not to exceed seven (7) days. Closing shall consist of the
delivery of the documents referenced in Section 3.02 below and the payment of
the Purchase Price as provided in Section 2.01 above, together with the
performance of the other matters required to occur at Closing pursuant to this
Agreement.
3.02 Closing Documents. At Closing, Seller, CommWorld and Purchaser, as
-----------------
appropriate, shall deliver, or cause to be delivered, the following items:
(a) Assignments. Purchaser and Seller shall each execute and deliver
-----------
the Assignment of Leasehold Interest in the form attached hereto as Exhibit
-------
"A", with respect to the Real Property Lease;
---
(b) Xxxx of Sale and Assignment. Seller shall execute and deliver the
---------------------------
Xxxx of Sale and Assignment in the form attached hereto as Exhibit "B";
-----------
ASSET PURCHASE AGREEMENT - Page 4
------------------------
(c) Lien Releases. Seller shall deliver such lien releases as shall
-------------
be necessary for Purchaser to acquire the Acquired Assets free and clear of all
liens, claims and encumbrances, except liens for 1998 personal property taxes
not yet delinquent and any contractual or statutory landlord's liens under, or
pursuant to, the Real Property Lease;
(d) Undertaking and Assumption Agreement. Purchaser shall execute and
------------------------------------
deliver the Undertaking and Assumption Agreement in the form attached hereto as
Exhibit "C";
-----------
(e) Mutual Release. Heath and Seller shall execute and deliver the
-------------
Mutual Release in the form attached hereto as Exhibit "D".
-----------
(f) Franchise Agreement. Purchaser and CommWorld shall execute and
-------------------
deliver the Franchise Agreement in the form attached hereto as Exhibit "E".
-----------
(g) Officer's Certificates. Each of Seller and Purchaser shall
----------------------
deliver a fully executed Officer's Certificate, executed by a senior executive
officer and dated the Closing Date, confirming the matters expressed in Section
8.01(a) and Section 8.02(a), respectively;
(h) Certificate of Authorities. Each of Seller and Purchaser shall
--------------------------
deliver (a) a certificate from the appropriate Governmental Authorities, dated
as of a date not more than seven (7) days prior to the Closing Date, attesting
to their Certificate or Articles of Incorporation, good standing and existence,
(b) a copy, certified by its Secretary, of the Bylaws, as amended and in effect
on the Closing Date, and resolutions duly adopted by the Board of Directors,
authorizing the transactions contemplated in this Agreement; and
(i) Other Documents. Seller shall deliver such other documents,
---------------
certificates of xxxxxx, endorsements, assignments and instruments in form and
substance reasonably satisfactory to Purchaser and its counsel, as shall be
necessary, advisable or desirable to vest in Purchaser title to the Acquired
Assets.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
4.01 Representations and Warranties of Seller. Seller hereby represents
----------------------------------------
and warrants to Purchaser that the following are true and correct as of Closing:
(a) Corporate Status. Seller is a corporation duly organized, validly
----------------
existing and in good standing under the laws of the State of Arizona.
(b) Authority. Seller has the requisite corporate power and authority
---------
to enter into this Agreement, and the other documents and agreements to be
entered into hereunder by Seller, and to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement by Seller, and the
other documents and agreements to be executed and delivered hereunder by Seller,
the performance by Seller of its obligations hereunder and thereunder and the
consummation by Seller of the transactions contemplated herein and therein have
been duly
ASSET PURCHASE AGREEMENT - Page 5
------------------------
authorized by the board of directors of Seller, and no other corporate
proceedings on the part of the Seller are necessary to authorize the execution
and delivery of this Agreement, and the other documents and agreements to be
executed and delivered hereunder, the performance by the Seller of its
obligations hereunder and thereunder, and the consummation by Seller of the
transaction contemplated hereby and thereby. This Agreement, and the other
documents and agreements to be executed and delivered hereunder, have been, or
will be at Closing, duly executed and delivered by Seller and constitute the
valid and binding obligations of Seller, enforceable in accordance with their
respective terms.
(c) No Impediment to Performance. Neither the execution nor the
----------------------------
performance of this Agreement by Seller, or the other documents and agreements
to be executed and performed by Seller hereunder, will conflict with or result
in any default under or in any violation of any provision of (a) the charter or
bylaws of Seller, (b) any agreement, mortgage, contract, or other instrument to
which Seller is a party or by which Seller or any of its properties (including,
without limitation, the Acquired Assets) is bound except for mortgages or
security instruments which will be released at, or prior to, Closing, or (b) any
applicable statute, regulation, ordinance, judgment, order or decree to which
Seller or any of its properties (including, without limitation, the Acquired
Assets) are subject.
(d) Title to Assets. Seller has good title to the Personal Property,
---------------
free and clear of liens, security interests and encumbrances, except liens for
1998 personal property taxes not yet delinquent and any contractual or statutory
landlord's liens under, or pursuant to, the Real Property Lease.
(e) Compliance with Laws. Seller is in compliance in all material
--------------------
respects with all applicable federal, state or local laws, statutes, ordinances,
federal, state or local laws, statutes, ordinances, regulations, orders and
other requirements of any Governmental Authority having jurisdiction over the
Acquired Assets or the conduct of the Business.
(f) Limited Warranty; Disclaimer Of Certain Warranties And
------------------------------------------------------
Representations. NOTWITHSTANDING ANY PROVISION TO THE CONTRARY IN THIS
---------------
AGREEMENT, SELLER MAKES NO REPRESENTATION WHATSOEVER AS TO THE PHYSICAL
CONDITION OF THE ACQUIRED ASSETS. PURCHASER AGREES THAT AS BETWEEN PURCHASER AND
SELLER, WITH RESPECT TO THE ACQUIRED ASSETS, PURCHASER SHALL ACCEPT THE ACQUIRED
ASSETS IN ITS "AS IS" CONDITION, WITH ALL FAULTS, AND SELLER EXPRESSLY DISCLAIMS
ANY WARRANTY OF MERCHANTABILTY OR FITNESS FOR ANY INTENDED OR PARTICULAR
PURPOSE. PURCHASER HEREBY WAIVES PURCHASER'S RIGHT TO RELY ON ANY
REPRESENTATION, WARRANTY, OR ASSURANCE HEREAFTER OR HERETOFORE MADE BY SELLER OR
SELLER'S EMPLOYEES. PURCHASER AGREES AND CONFIRMS THAT NEITHER SELLER NOR ANY OF
SELLER'S OFFICERS, EMPLOYEES AND/OR AGENTS HAVE MADE AFFIRMATIONS OF FACT OR
PROMISES RELATING TO THE ACQUIRED ASSETS.
ASSET PURCHASE AGREEMENT - Page 6
------------------------
4.02 Representations and Warranties of Purchaser. Purchaser hereby
-------------------------------------------
represents and warrants to Seller that the following are true and correct as of
Closing:
(a) Corporate Status. Purchaser is a corporation duly organized,
----------------
validly existing and in good standing under the laws of the State of Arizona.
(b) Authority. Purchaser has the requisite corporate power and
---------
authority to enter into this Agreement, and the other documents and agreements
to be entered into hereunder by Purchaser, and to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement by
Purchaser, and the other documents and agreements to be executed and delivered
hereunder by Purchaser, the performance by Purchaser of its obligations
hereunder and thereunder and the consummation by Purchaser of the transactions
contemplated herein and therein have been duly authorized by the board of
directors of Purchaser, and no other corporate proceedings on the part of the
Purchaser are necessary to authorize the execution and delivery of this
Agreement, and the other documents and agreements to be executed and delivered
hereunder, the performance by the Purchaser of its obligations hereunder and
thereunder, and the consummation by Purchaser of the transaction contemplated
hereby and thereby. This Agreement, and the other documents and agreements to be
executed and delivered hereunder, have been, or will be at Closing, duly
executed and delivered by Purchaser and constitute the valid and binding
obligations of Purchaser, enforceable in accordance with their respective terms.
(c) No Impediment to Performance. Neither the execution nor the
----------------------------
performance of this Agreement by Purchaser, or the other documents and
agreements to be executed and performed by Purchaser hereunder, will conflict
with or result in any default under or in any violation of any provision of (a)
the articles or bylaws of Purchaser, (b) any agreement, mortgage, contract or
other instrument to which Purchaser is a party or by which Purchaser or any of
its properties is bound except for mortgages or security instruments which will
be released at, or prior to, Closing, or (b) any applicable statute, regulation,
ordinance, judgment, order or decree to which Purchaser or any of its properties
are subject.
(d) Compliance with Laws. Purchaser is in compliance in all material
--------------------
respects with all applicable federal, state or local laws, statutes, ordinances,
federal, state or local laws, statutes, ordinances, regulations, orders and
other requirements of any Governmental Authority having jurisdiction over the
conduct of Purchaser's business.
ARTICLE V
COVENANTS OF SELLER
-------------------
Seller hereby covenants to Purchaser that:
5.01 Conduct of the Business Pending Closing. Seller covenants and agrees
---------------------------------------
that, prior to the earlier of (a) the Closing, or (b) the termination of this
Agreement in accordance with the provisions hereof, except as otherwise agreed
to in writing by Purchaser, or otherwise expressly contemplated by this
Agreement, Seller will cause the Business to be conducted in the ordinary course
of business and consistent with past practice.
ASSET PURCHASE AGREEMENT - Page 7
------------------------
5.02 Reasonable Efforts. Seller agrees that prior to the Closing it will
------------------
use all reasonable efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement; provided,
however, that, Seller shall not be required (a) to incur any expense (except
that Seller shall incur those fees and expenses, including fees of legal,
accounting and other advisors, and take such other actions which are normal and
customary for transactions of the type contemplated by this Agreement or are
otherwise provided to be taken by Seller pursuant to the terms of this
Agreement) or further obligation, (b) to agree to any condition or obligation
affecting the business or assets of Seller or any of its affiliates, other than
conditions or obligations that become effective only upon consummation of the
transactions contemplated by this Agreement, or (c) to agree to the amendment or
other modification of any terms of any material agreement constituting or
relating to any of the Acquired Assets, other than amendments or modifications
that become effective only upon consummation of the transactions contemplated by
this Agreement and which are consented to in writing by Purchaser.
ARTICLE VI
COVENANTS OF PURCHASER
----------------------
6.01 Maintenance of Records. Purchaser shall keep and maintain all
----------------------
documents and records relating to the Business acquired pursuant to the
transactions contemplated in this Agreement for a period of five (5) years after
Closing. Upon request, Purchaser shall make such documents and records available
to Seller and Seller's accountants, counsel and other designated representatives
for inspection and copying, at Seller's expense, during regular business hours.
Should Purchaser sell or otherwise dispose of all or substantially all of the
Business, the acquiror(s) shall be specifically required to assume the
obligations of this Section 6.01 as a part of any such acquisition.
6.02 Reasonable Efforts. Purchaser agrees that prior to the Closing it
------------------
will use all reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement;
provided, however, that, Purchaser shall not be required to (a) incur any
expense (except that Purchaser shall incur those fees and expenses, including
fees of legal, accounting and other advisors, and take such other actions which
are normal and customary for transactions of the type contemplated by this
Agreement or otherwise provided to be taken by Purchaser pursuant to this
Agreement) or further obligation, (b) to agree to any condition or obligation
affecting the Business or the Acquired Assets or Purchaser's business or assets
that adversely affects Purchaser's economic position with respect thereto or the
business or assets of Purchaser or any of its affiliates, or (c) to the
amendment or other modification of any terms of any material agreement
constituting or relating to any of the Acquired Assets that adversely affects
Purchaser's economic position with respect thereto.
ASSET PURCHASE AGREEMENT - Page 8
------------------------
ARTICLE VII
ADDITIONAL AGREEMENTS OF PURCHASER AND SELLER
---------------------------------------------
7.01 Employees and Subagents. As of the Closing Date those employees and
-----------------------
independent contractors who work and provide services exclusively to the
Business (including Heath) and not to any of the businesses retained by Seller,
shall terminate their relationship with Seller. Seller shall use its reasonable
efforts, upon Purchaser's request, to ensure that such persons and entities
continue their relationship with the Business and Purchaser. Heath's and Xxxxxxx
Xxxxx'x employment agreements with Seller or CommWorld shall terminate at
Closing.
7.02 Toshiba Products. For a period of two (2) years after Closing,
----------------
CommWorld will sell inventory to Purchaser at CommWorld's cost plus a five
percent (5%) royalty; provided, however, that such sales of product shall remain
subject to CommWorld's standard terms and conditions of sale (including credit
approval), as same may be amended from time to time by CommWorld. At the end of
such two (2) year period, the royalty will be determined by CommWorld on the
bases of Purchaser's purchase volumes.
7.03 Prorations. Base and percentage rents, insurance premiums, common
----------
area maintenance expenses, and ad valorem taxes (the "Prorated Expenses") for
the current year shall be prorated at Closing effective as of the date of
Closing. If Closing shall occur before the amount of any Prorated Expense is
fixed for the then current year, the apportionment of the Prorated Expense shall
be upon the basis of the Prorated Expense for the preceding year (applied to the
latest assessed valuation, if appropriate), but any difference in actual and
estimated Prorated Expenses for the year of sale actually paid by Purchaser
shall be adjusted between the parties upon receipt of written evidence of the
payment thereof. This Section 7.03 shall survive the Closing.
7.04 Brokers. Each party represents and warrants to the other party that
-------
such party has had no dealings with any person, firm, agent or finder in
connection with the negotiation of this Agreement and/or the consummation of the
purchase and sale contemplated herein, and no broker, agent, person, firm or
entity is entitled to any commission or finder's fee in connection with this
transaction as the result of any dealings or acts of such party. Each party
hereby agrees to indemnify, defend, protect and hold the other party harmless
from and against any costs, expenses or liability for compensation, commission,
fee, or charges which may be claimed by any broker, agent, finder or other
similar party by reason of any dealings or act of the indemnifying party. This
Section 7.04 shall survive the Closing.
7.05 Casualty Loss. All risk of loss to the Acquired Assets shall remain
-------------
upon Seller prior to Closing. If, prior to Closing, the Acquired Assets are
damaged or destroyed by fire or other casualty, to a material extent, Purchaser
may either terminate this Agreement by written notice to Seller or close. If
Purchaser elects to close, despite said material damage or destruction, there
shall be no reduction in the Purchase Price, and Seller shall assign to
Purchaser Seller's right, title and interest in and to all insurance proceeds
resulting or to result from said damage or
ASSET PURCHASE AGREEMENT - Page 9
------------------------
destruction. Unless otherwise provided herein, the term "material" shall mean
damage or destruction, the cost of repairing which exceeds ten percent (10%) of
the Purchase Price. If, prior to Closing, the Acquired Assets are damaged or
destroyed by fire or other casualty to less than a material extent, Seller shall
either repair the same prior to Closing, at Seller's expense, or reimburse
Purchaser for the cost of repairing the same by assigning any insurance proceeds
resulting therefrom (which insurance proceeds shall be sufficient to repair such
damage) to Purchaser or by allowing Purchaser to deduct such cost from the
consideration payable to Seller at Closing. If the extent of damage or the
amount of insurance proceeds to be made available is not able to be determined
prior to Closing, or the repairs are not able to be completed prior to said
date, either party, by written notice to the other, may postpone the date of
Closing to such date as shall be designated in such notice, but not more than
thirty (30) days after Closing.
7.06 Cancellation of Services. On the Closing Date, Seller will cancel
------------------------
all services of the Business, including, without limitation, telephone,
utilities, and pager services. Purchaser will be responsible for obtaining all
of the services in its name and transferring all telephone numbers to an account
established by Purchaser and Seller shall assist and cooperate in connection
therewith.
ARTICLE VIII
CONDITIONS OF CLOSING
---------------------
8.01 Obligation of Purchaser. The obligation of Purchaser to consummate
-----------------------
the purchase and sale contemplated by the provisions of this Agreement shall be
subject to the fulfillment on or prior to the Closing Date of the following
conditions (any of which may be waived in writing, in whole or part, by
Purchaser):
(a) Representations and Warranties; Performance. The representations
-------------------------------------------
and warranties of Seller set forth in this Agreement shall be true, correct and
complete when made on the date hereof, and, except for such changes in the
Schedules as are expressly permitted by Section 1.06 hereof, as of the Closing
Date (as though such representations and warranties were made anew at and as of
such date), except with respect to the effect of transactions specifically
permitted by the provisions of this Agreement. Seller shall have duly performed
in all material respects all agreements and covenants herein required to be
performed by Seller on or before the Closing Date.
(b) Closing Documents. Seller shall deliver, or cause to be
-----------------
delivered, all of the documents required to be delivered pursuant to Section
3.02 above.
(c) Consents and Approvals. Except as otherwise provided in Section
----------------------
1.03 above, all material consents, approvals and novations, in form and
substance reasonably satisfactory to Purchaser, of third parties and each
Governmental Authority that shall be (i) required to consummate the transactions
contemplated hereby, or (ii) reasonably necessary to permit Purchaser to operate
the Business, shall have been obtained.
ASSET PURCHASE AGREEMENT - Page 10
------------------------
8.02 Obligation of Seller. The obligation of Seller to consummate the
--------------------
purchase and sale contemplated by the provisions of this Agreement shall be
subject to the fulfillment on or prior to the Closing Date of the following
conditions (any of which may be waived in writing, in whole or in part by
Seller):
(a) Representations and Warranties; Performance. The representations
-------------------------------------------
and warranties of Purchaser set forth in this Agreement shall be true, correct
and complete when made on the date hereof, and as of the Closing Date (as though
such representations and warranties were made anew at and as of such date),
except with respect to the effect of transactions specifically permitted by the
provisions of this Agreement. Purchaser shall have duly performed in all
material respects all agreements and covenants herein required to be performed
by Purchaser on or before the Closing Date.
(b) Consents and Approvals. Except as otherwise provided in Section
----------------------
1.03 above, all material consents, approvals and novations, in form and
substance reasonably satisfactory to Seller of third parties and each
governmental authority that shall be (i) required to consummate the transactions
contemplated hereby, or reasonably necessary to permit Purchaser to operate the
Business hall have been obtained.
(c) Closing Documents. Purchaser shall have delivered, or caused to
-----------------
be delivered, all of the documents required to be delivered pursuant to Section
3.02 above.
ARTICLE IX
INDEMNIFICATION
---------------
9.01 General Indemnification. Purchaser hereby agrees to indemnify and
-----------------------
save harmless Seller from any and all losses, claims, demands, actions, causes
of action, suits, proceedings, damages, liabilities, costs, and expenses,
including attorney's and other professional fees, of every nature and kind
whatsoever (collectively, "Losses") occurring subsequent to 11:59 p.m., Tucson
time, on the date of Closing; which may arise or exist with respect to (a) any
failure of Purchaser to assume, pay, perform and discharge the Assumed
Liabilities, (b) Purchaser's breach of any of Purchaser's representations,
warranties, obligations, covenants or agreements contained in this Agreement,
(c) any action, claim, judicial or other proceeding asserted by any third party
against Seller with respect to any of the Assumed Liabilities, or (d) any
liabilities or obligations accruing by Purchaser as a result of the operation of
the Business by Purchaser. Seller hereby agrees to indemnify and save harmless
Purchaser from any and all Losses occurring at or prior to 11:59 p.m., Tucson
time, on the date of Closing; which may arise or exist with respect to (a) any
failure of Seller to assume, pay, perform and discharge the Retained
Liabilities, (b) Seller's breach of any of Seller's representations, warranties,
covenants or agreements contained in this Agreement, (c) any action, claim,
judicial or other proceeding asserted by any third party against Seller with
respect to any of the Retained Liabilities, or (d) any liabilities or
obligations accruing after the Closing Date as a result of the operation of the
Business by Seller.
ASSET PURCHASE AGREEMENT - Page 11
------------------------
9.02 Notification of Claim. Each indemnified party will promptly, and
---------------------
within fifteen (15) days (except in the case of litigation where such notice
shall be required within five (5) days) after notice to such indemnified party
of any claim as to which it asserts a claim for indemnification, notify the
indemnifying party of such claim and the amount thereof; provided, however, if
the indemnified party fails to give such notification the indemnifying party
shall be entitled to offset the incremental losses incurred by the indemnifying
party as a result of the failure by the indemnified party to give such notice
against Losses the indemnifying party would otherwise be required to pay. During
such fifteen (15) day notice period, without the indemnifying party's prior
written consent, the indemnified party shall not pay, settle or compromise any
such claim; provided, however, if the indemnified party pays, settles or
compromises any such claim, or any such litigation or proceeding during such
fifteen (15) day period, the indemnifying party shall be entitled to offset the
incremental losses incurred by the indemnifying party as a result of the
indemnifying party paying, settling or compromising any such claim, litigation
or proceeding during such fifteen (15) day period. Notice to an indemnified
party for the purpose of the preceding sentence shall mean the service of
process on such party in any legal action, receipt of any claim in writing or
similar form of actual written notice.
9.03 Defense of Claim. If, with respect to any claim which may give rise
----------------
to indemnity under this Agreement resulting from or arising out of any claim or
legal proceeding by a person other than the indemnified party (a "Third-Party
Claim"), the indemnifying party acknowledges in writing to the indemnified party
the indemnifying party's obligation to indemnify the indemnified party pursuant
hereto, the indemnifying party, at its sole cost and expense, may, upon written
notice to the indemnified party, assume the defense of such claim or related
legal proceeding. If the indemnifying party so assumes the defense of any such
claim or legal proceeding, the indemnifying party shall select counsel
reasonably acceptable to the indemnified party to conduct the defense of such
claim or legal proceeding and, at the sole cost and expense of the indemnifying
party, shall take all steps necessary in the defense or settlement thereof,
provided that the indemnifying party shall not expressly consent to a settlement
or compromise of, or expressly consent to the entry of any judgment arising
from, any such claim or legal proceeding without the prior written consent (not
to be unreasonably withheld) of the indemnified party (it being understood that
in considering whether or not to give such consent the indemnified party is
entitled to assess the implications of such settlement, compromise or judgment
on the future conduct of the indemnified party's business activities). The
indemnified party shall be entitled to participate in (but not control) the
defense of any such action, with its own counsel and at its own expense. Whether
or not the indemnifying party chooses to defend any claim or litigation for
which the indemnified party may be entitled to indemnification hereunder, each
of the parties hereto shall cooperate in the defense thereof.
If, with respect to a Third-Party Claim, the indemnifying party
neither acknowledges nor disclaims in writing, or the indemnifying party
disclaims in writing to the indemnified party, the indemnifying party's
obligation to indemnify the indemnified party pursuant hereto, the indemnified
party may defend against such claim or related legal proceeding with such
counsel and in such manner as they deem appropriate, and may consent to the
ASSET PURCHASE AGREEMENT - Page 12
------------------------
settlement or compromise of, or consent to the entry of a judgment arising from,
such claim or legal proceeding without the consent of the indemnifying party.
From and after the date of delivery of notice of a Third-Party Claim
hereunder, at the reasonable request of the indemnifying party the indemnified
party shall grant the indemnifying party and its representatives full and
complete access to the books, records and properties of the indemnified party to
the extent reasonably related to the matters to which the Third-Party Claim
relates. The indemnifying party will not disclose to any third person (except
its representatives participating in such Third-Party Claim) any information
obtained pursuant to this Section which is designated as confidential by the
indemnified party and which is not otherwise generally available to the public,
except as may be required by applicable law. The indemnifying party shall
instruct its representatives not to disclose any such information (except as may
be required by applicable law). All such access shall be granted during normal
business hours, shall be subject to the normal safety regulations of the
indemnified party, and shall be granted under conditions which will not
interfere with the business and operations of the indemnified party.
ARTICLE X
TERMINATION AND REMEDIES
------------------------
10.01 Termination of Agreement. This Agreement and the transactions
------------------------
contemplated hereby may be terminated and abandoned at any time on or prior to
the Closing as follows:
(a) by the written consent of Purchaser and Seller;
(b) by Purchaser, (i) if there is or occurs an inaccuracy in any
material respect in the representations and warranties of Seller set forth in
this Agreement, which inaccuracy is not capable of being cured by December
______, 1998, (ii) if there has been a breach in any material respect of a
covenant of Seller, or a failure in any material respect on the part of Seller
to comply with its obligations hereunder, and such breach or failure is not
capable of being cured by December ______, 1998, (iii) if any of the conditions
set forth in Section 8.01 hereof are not satisfied on or before December ______,
1998, or (iv) at such other times as are expressly permitted by this Agreement;
(c) by Seller, (i) if there is or occurs an inaccuracy in any
material respect in the representations and warranties of Purchaser set forth in
this Agreement, which inaccuracy is not capable of being cured by December
______, 1998, (ii) if there has been a breach in any material respect of a
covenant of Purchaser, or failure in any material respect on the part of
Purchaser to comply with its obligations hereunder, and such breach or failure
is not capable of being cured by December ______, 1998, or (iii) if any of the
conditions set forth in Section 8.02 hereof are not satisfied on or before
December ______, 1998; and
(d) by Purchaser or Seller (i) if the Closing Date shall not have
occurred before December ______, 1998, for any reason other than the failure of
the party seeking to terminate this Agreement to perform in any material respect
its obligations hereunder or the
ASSET PURCHASE AGREEMENT - Page 13
------------------------
breach or inaccuracy in any material respect of a representation or warranty
made by such party, and (ii) at such other times as are expressly permitted by
this Agreement.
10.02 Obligations upon Termination. Except for obligations provided in
----------------------------
Section 6.01 hereof, in the event that this Agreement is terminated pursuant to
the provisions of Section 10.01(a) or (d) hereof, Seller shall have no
obligation to Purchaser and Purchaser shall have no obligation to Seller. In the
event that Seller or Purchaser shall terminate this Agreement pursuant to
Section 10.01(b) or (c) hereof, respectively, the right of Purchaser or Seller,
as the case may be, to pursue any and all rights it may have at law or equity or
hereunder shall survive unimpaired.
ARTICLE XI
MISCELLANEOUS PROVISIONS
------------------------
11.01 Notices. Any notice, consent, request, claim or other communication
-------
hereunder shall be in writing and shall be deemed to have been duly given if (a)
delivered by hand, (b) delivered by telecopy with receipt thereof confirmed, (c)
delivered by overnight courier, or (d) delivered or deposited with the U.S.
Postal Service with sufficient postage prepaid to ensure delivery by Registered
or Certified Mail, Return Receipt Requested, with each such notice being
delivered to the address or telecopy number shown for the respective party at
the conclusion of this Agreement. Such addresses or telecopy number may be
changed by any party by notice given in the manner provided above.
11.02 Entire Agreement; Amendment. This Agreement, together with all
---------------------------
exhibits and the documents referred to herein, contains all the terms and
conditions agreed upon by the parties hereto with respect to the transactions
contemplated hereby, and shall not be amended or modified except by written
instrument signed by all of the parties.
11.03 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the xxxxxxxxxxxxxxx, xxxxx, xxxxxxx, successors and
assigns to the parties hereto.
11.04 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
UNDER THE LAWS OF THE STATE OF ARIZONA.
11.05 Assignment. Purchaser shall not be permitted to assign this
----------
Agreement without the prior written consent of Seller.
11.06 Counterparts; Facsimile. This Agreement may be executed in
-----------------------
counterparts. Facsimile signatures shall be effective.
11.07 Time for Performance. Time is of the essence with respect to the
--------------------
performance of each party's duties and obligations under this Agreement. Strict
compliance with the times for performance is required.
ASSET PURCHASE AGREEMENT - Page 14
------------------------
11.08 Attorneys' Fees. The prevailing party in any legal proceeding
---------------
brought under or with relation to this Agreement or transaction shall be
entitled to recover court costs, reasonable attorneys' fees, and all other
litigation expenses from the non-prevailing parties.
11.09 Survival. The representations and warranties contained in this
--------
Agreement, shall survive the Closing for a period of one (1) year.
11.10 Jurisdiction and Venue. Any judicial proceedings brought by or
----------------------
against any party on any dispute arising out of this Agreement or any matter
related thereto shall be brought in the state or federal courts of Pima County,
Tucson, Arizona, and, by execution and delivery of this Agreement, each of the
parties accepts for itself the exclusive jurisdiction and venue of the aforesaid
courts as trial courts, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement after exhaustion of all
appeals taken (or by the appropriate appellate court if such appellate court
renders judgment).
11.11 Interest. To the extent that either Seller or Purchaser fails to
--------
pay or reimburse the other party as expressly provided hereunder, the party
failing to make such payment, in addition to the other rights and remedies
hereunder, shall also be required to pay the other party interest at the lesser
of (a) eighteen percent (18%) per annum, and (b) the highest rate permitted by
applicable law.
11.12 Expenses. Each party shall bear all expenses incurred by such party
--------
in connection with negotiating, documenting, consummating or investigating the
transactions contemplated herein.
Signature Page Follows
ASSET PURCHASE AGREEMENT - Page 15
------------------------
IN WITNESS WHEREOF, this Asset Purchase Agreement is entered into by Seller
and Purchaser as of the date first above written.
COMMWORLD:
COMMUNICATIONS WORLD INTERNATIONAL, INC., a
Colorado corporation
By:___________________________________________
Printed Name:_________________________________
Title:________________________________________
SELLER:
COMMWORLD OF PHOENIX, INC., an Arizona
corporation
By:___________________________________________
Printed Name:_________________________________
Title:________________________________________
PURCHASER:
DIGITAL VOICE AND DATA, INC., an Arizona
corporation
By:___________________________________________
Xxxx Xxxxx, President
______________________________________________
XXXX XXXXX
ASSET PURCHASE AGREEMENT - Page 16
------------------------
ASSIGNMENT OF LEASEHOLD INTEREST
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the undersigned, COMMWORLD OF PHOENIX, INC., an
Arizona corporation, hereinafter referred to as ASSIGNOR, does hereby assign,
transfer and convey to DIGITAL VOICE AND DATA, INC., an Arizona corporation,
hereinafter referred to as ASSIGNEE, all its rights, title and interest in and
to the Lease dated January 1, 1997, by and between Xxxxxx Enterprises, (the
"Landlord"), as Landlord, and Assignor, as Tenant, a copy of which has been
provided to Assignee (the "Lease"). This Assignment is being delivered by
Assignor to Assignee pursuant to that certain Asset Purchase Agreement dated
December _____, 1998, by and among Assignor, Communications World International,
Inc., Xxxx Xxxxx and Assignee.
ASSIGNEE, in accepting the foregoing assignment, as of the date of the
execution of this assignment, assumes and agrees to perform all of the terms,
conditions, covenants and agreements of the Lease on the part of the Lessee to
be performed, including making all payments due to or payable on behalf of
Landlord.
This Assignment may be executed in any number of counterparts, and
each counterpart hereof shall be deemed to be an original instrument, but all
such counterparts shall constitute but one Assignment.
The Assignment will bind and inure to the benefit of the parties,
their successors in interest and assigns.
IN WITNESS WHEREOF, ASSIGNOR and ASSIGNEE have executed this
Assignment as of the ____ day of December, 1998.
ASSIGNOR:
COMMWORLD OF PHOENIX, INC., an Arizona corporation
By:_____________________________________
Printed Name:___________________________
Title:__________________________________
ASSIGNEE:
DIGITAL VOICE AND DATA, INC.
By: ________________________________
Xxxx Xxxxx, President
ASSIGNMENT OF LEASEHOLD INTEREST - Page 1
--------------------------------
XXXX OF SALE AND ASSIGNMENT
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, paid by DIGITAL VOICE AND DATA, INC., an Arizona
corporation ("Purchaser"), to COMMWORLD OF PHOENIX, INC., an Arizona corporation
("Seller"), Seller does hereby SELL, TRANSFER, ASSIGN and DELIVER to Purchaser,
its successors and assigns, all of Seller's right, title and interest in and to
the Acquired Assets (as that term is defined in that certain Asset Purchase
Agreement dated December ___, 1998, by and among Seller, Communications World
International, Inc., Xxxx Xxxxx and Purchaser).
Notwithstanding anything contained in this Xxxx of Sale and Assignment
or in the Asset Purchase Agreement to the contrary, the Acquired Assets shall
not include any of the Retained Assets, as such term is defined in the Asset
Purchase Agreement.
TO HAVE AND TO HOLD the Acquired Assets unto Purchaser, its successors
and assigns, forever and Seller does hereby bind itself and its successors to
WARRANT and FOREVER DEFEND, all and singular, title to the Acquired Assets unto
Purchaser, its successors and assigns, against every person whomsoever lawfully
claiming or to claim the same, or any part thereof, by or through Seller.
Further, Seller hereby warrants that title to the Acquired Assets is free and
clear from any security interest, lien, or encumbrance.
Seller hereby agrees to execute and/or deliver or cause to be executed
and/or delivered all such other documents and instruments, and to perform such
further acts and assurances, as Purchaser may reasonably require to perfect
Purchaser's interest in the Acquired Assets.
NOTWITHSTANDING ANY PROVISION TO THE CONTRARY IN THIS AGREEMENT,
SELLER MAKES NO REPRESENTATION WHATSOEVER AS TO THE PHYSICAL CONDITION OF THE
ACQUIRED ASSETS. PURCHASER AGREES THAT AS BETWEEN PURCHASER AND SELLER, WITH
RESPECT TO THE ACQUIRED ASSETS, PURCHASER SHALL ACCEPT THE ACQUIRED ASSETS IN
ITS "AS IS" CONDITION, WITH ALL FAULTS, AND SELLER EXPRESSLY DISCLAIMS ANY
WARRANTY OF MERCHANTABILTY OR FITNESS FOR ANY INTENDED OR PARTICULAR PURPOSE.
PURCHASER HEREBY WAIVES PURCHASER'S RIGHT TO RELY ON ANY REPRESENTATION,
WARRANTY, OR ASSURANCE HEREAFTER OR HERETOFORE MADE BY SELLER OR SELLER'S
EMPLOYEES. PURCHASER AGREES AND CONFIRMS THAT NEITHER SELLER NOR ANY OF SELLER'S
OFFICERS, EMPLOYEES AND/OR AGENTS HAVE MADE AFFIRMATION OF FACT OR PROMISE
RELATING TO THE ACQUIRED ASSETS.
Signature Page Follows
XXXX AND SALE OF ASSIGNMENT - Page 1
---------------------------
IN WITNESS WHEREOF, Seller has caused this Xxxx of Sale to be executed
this ____ day of December, 1998.
SELLER:
COMMWORLD OF PHOENIX, INC., an Arizona corporation
By: ______________________________________
Printed Name: _____________________________
Title: ____________________________________
XXXX AND SALE OF ASSIGNMENT - Page 2
---------------------------
UNDERTAKING AND ASSUMPTION AGREEMENT
THIS UNDERTAKING AND ASSUMPTION AGREEMENT dated December ___, 1998, is
executed by DIGITAL VOICE AND DATA, INC., an Arizona corporation ("Purchaser"),
in favor of COMMWORLD OF PHOENIX, INC., an Arizona corporation ("Seller") and
COMMUNICATIONS WORLD INTERNATIONAL, INC., a Colorado corporation ("CommWorld").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to that certain Asset Purchase Agreement dated as of
December _____, 1998, (the "Asset Purchase Agreement"), by and among Purchaser,
Xxxx Xxxxx, CommWorld and Seller, Seller is delivering to Purchaser the assets,
properties, rights and interests defined in the Agreement as the Acquired
Assets; and
WHEREAS, in partial consideration for such sale, assignment, transfer,
conveyance and delivery of the Acquired Assets, the Agreement requires Purchaser
to assume and agree to discharge certain obligations and liabilities of Seller.
NOW, THEREFORE, pursuant to the terms of the Agreement and for good
and valuable consideration, Purchaser hereby assumes and agrees to pay, perform
and discharge in accordance with the terms thereof each of the Assumed
Liabilities (as such term is defined in the Asset Purchase Agreement); provided,
--------
hereby, that Purchaser expressly does not assume and shall not be liable for any
------
liability or obligation under any Retained Asset or Retained Liability (as such
terms are defined in the Asset Purchase Agreement). Nothing contained herein,
express or implied, in intended to confer upon any person or entity other than
the parties hereto and their successors in interest and permitted assigns any
rights or remedies under or by reason of this Agreement and no such third party
shall be entitled to rely on this Agreement. Except as expressly provided
hereinabove, or in the Asset Purchase Agreement, Purchaser does not assume or
agree to pay, perform or discharge, and shall not be responsible for, any
liabilities or obligations of Seller, whether accrued, absolute, contingent or
otherwise.
This Undertaking and Assumption Agreement shall inure to the benefit
of and be binding upon the successors and assigns of Purchaser and Seller.
This Agreement, and the rights and obligations of the parties hereto,
shall be governed by and construed and enforced in accordance with the
substantive laws of the State of Arizona, without regard to its principles of
conflicts of laws.
Nothing contained herein shall be deemed to modify, alter or amend the
terms and provisions of the Asset Purchase Agreement.
Signature Page Follows
UNDERTAKING AND ASSUMPTION AGREEMENT - Page 1
------------------------------------
IN WITNESS WHEREOF, Purchaser has caused this Undertaking and
Assumption Agreement to be duly executed and delivered as of the date first set
forth above.
DIGITAL VOICE AND DATA, INC., an Arizona
corporation
By:________________________________
Xxxx Xxxxx, President
UNDERTAKING AND ASSUMPTION AGREEMENT - Page 2
------------------------------------
