Communications World International, Inc.
Form 10-SB
Exhibit 2 (d)
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 ("CWII"), COMMWORLD OF PHOENIX, INC., an Arizona
corporation ("Seller"), XXXX XXXXX ("Xxxxx"), and SUMMIT TEAM INVESTMENTS, 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 Scottsdale, Arizona (the
"Business");
WHEREAS, Seller is the wholly-owned subsidiary of CWII and Heath is the
sole director, officer and shareholder of Purchaser; and
WHEREAS, Seller, CWII, 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"); provided, however,
---------------
that Seller shall be permitted to terminate the Real Property Lease if the
landlord thereunder fails to consent to the assignment of the Real Property
Lease to Purchaser within fourteen (14) days of Seller's request for such
landlord's consent and Purchaser shall not be entitled to terminate this
Agreement as a result of such termination.
(b) Books, Records and Written Materials. All books of account,
------------------------------------
records, files, invoices, customer lists, supplier lists, promotional and
advertising materials, catalogs,
ASSET PURCHASE AGREEMENT - Page 1
------------------------
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 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. Fifty Thousand and No/100 Dollars ($50,000.00) worth of
---------
inventory (valued based upon the book value thereof) located at the Leased
Premises and selected by Purchaser on or prior to Closing.
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) all inventory not selected by Purchaser pursuant to
Section 1.01(g) above, (c) items being purchased by Seller under installment
sales, (d) 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, and (e) all of Seller's right, title and
interest in and to all of Seller's cash and cash equivalents in place at
Closing.
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.
ASSET PURCHASE AGREEMENT - Page 2
------------------------
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 liabilities of Seller based upon events occurring on or
after the Closing Date under (i) the Real Property Lease, (ii) the Personal
Property Leases, and (iii) 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."
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 (i) any other item of such Schedule,
(ii) any other Schedules, and (iii) 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 the sum of SIXTY FIVE THOUSAND FORTY FOUR AND NO/100 DOLLARS ($65,044.00)
(the "Purchase Price"). The Purchase Price shall consist of (i) 80,088 shares
of Series B Preferred Stock, $1.00 par value per share, of CWII, including all
accumulated, but unpaid dividends thereon (the "Series B Stock"), standing in
the name of Heath on the books of CWII and represented by stock certificate
number ____; (ii) 50,000 shares of Series F Preferred Stock, $1.00 par value per
share, of CWII, including all accumulated, but unpaid dividends thereon (the
"Series F Stock), standing in the name of Heath on the books of CWII and
represented by Stock Certificate Number ______; and (iii) all accumulated, but
unpaid dividends on the 64,812 shares of Series F Preferred Stock, $1.00 par
value per share, of CWII, standing in the name of Heath on the books of CWII and
represented by Stock Certificate No. ______.
ASSET PURCHASE AGREEMENT - Page 3
------------------------
2.02 Removal of Inventory. Seller and CWII 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. Upon prior notice to
Purchaser, Purchaser shall provide Seller and CWII 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 (i) 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 (ii) 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 CWII 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, CWII, Heath 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";
-----------
(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,
ASSET PURCHASE AGREEMENT - Page 4
------------------------
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 General Release in the form attached hereto as Exhibit "D".
-----------
(f) Franchise Agreement. Purchaser and CWII 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 (i) 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,
(ii) 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;
(i) Stock Powers. Heath shall execute and deliver to Purchaser
------------
stock powers, in form and content reasonably acceptable to Purchaser, sufficient
to transfer the Series B Stock and Series F Stock to CWII; and,
(j) 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
ASSET PURCHASE AGREEMENT - Page 5
------------------------
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 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 (i) the charter or
bylaws of Seller, (ii) 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 (iii)
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 AFFIRMATION OF FACT OR
PROMISE 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 (i)
the articles or bylaws of Purchaser, (ii) 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 (iii) 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 (i) the Closing, or (ii) 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
ASSET PURCHASE AGREEMENT - Page 7
------------------------
course of business and consistent in the ordinary course of business and
consistent with past practice.
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 (i) 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, (ii) 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 (iii) 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 (i) 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, (ii) 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 (iii) 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 employment
agreement with Seller or CWII shall terminate at Closing.
7.02 Products. For a period of three (3) years after Closing, CWII will
--------
sell products to Purchaser at CWII's cost plus a five percent (5%) royalty;
provided, however, that such sales of product shall remain subject to CWII's
standard terms and conditions of sale (including credit approval), as same may
be amended from time to time by CWII. At the end of such three (3) year period,
the royalty will be determined by CWII on the bases of Purchaser's purchase
volumes.
7.03 No Non-Compete. CWII and Seller shall have the right to make
--------------
acquisitions and operate other company-owned offices in the Phoenix, Arizona
market after Closing and CWII and Seller shall not be bound by any non-compete
restrictions.
7.04 CWII Employee. An employee of CWII will reside at the Business'
-------------
principal place of business, at no additional cost or expense to CWII, for
approximately sixty (60) days after Closing, for the purpose of collecting
existing accounts receivable, which accounts receivable are pledged to Republic
Bank.
7.05 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 7.05 shall survive the Closing.
7.06 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 with 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 7.06 shall survive the Closing.
ASSET PURCHASE AGREEMENT - Page 9
------------------------
7.07 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 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.
7.08 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.
ASSET PURCHASE AGREEMENT - Page 10
------------------------
(c) Consents and Approvals. 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.
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. 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., Phoenix
time, on the date of Closing; which may arise or exist with respect to (i) any
failure of Purchaser to assume, pay, perform and discharge the Assumed
Liabilities, (ii) Purchaser's breach of any of Purchaser's representations,
warranties, obligations, covenants or agreements contained in this Agreement,
(iii) any action, claim, judicial or other proceeding asserted by any third
party against Seller with respect to any of the Assumed Liabilities, or (iv) 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., Phoenix
time, on the date of Closing; which may arise or exist with respect to (i) any
failure of Seller to assume, pay, perform and discharge the Retained
Liabilities, (ii) Seller's breach of any of Seller's representations,
warranties, covenants or agreements contained in this Agreement, (iii) any
action, claim, judicial or other proceeding
ASSET PURCHASE AGREEMENT - Page 11
------------------------
asserted by any third party against Seller with respect to any of the Retained
Liabilities, or (iv) any liabilities or obligations accruing after the Closing
Date as a result of the operation of the Business by Seller.
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
ASSET PURCHASE AGREEMENT - Page 12
------------------------
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 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
ASSET PURCHASE AGREEMENT - Page 13
------------------------
(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 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 (i) delivered by hand, (ii) delivered by telecopy with receipt
thereof confirmed, (iii) delivered by overnight courier, or (iv) 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
----------------------
insure 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.
ASSET PURCHASE AGREEMENT - Page 14
------------------------
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.
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 Maricopa
County, Phoenix, 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.
CWII:
COMMUNICATIONS WORLD INTERNATIONAL, INC., a
Colorado corporation
By:_________________________________________
Printed Name:_______________________________
Title:______________________________________
SELLER:
COMMWORLD OF PHOENIX, INC., an Arizona
corporation
By:_________________________________________
Printed Name:_______________________________
Title:______________________________________
PURCHASER:
SUMMIT TEAM INVESTMENTS, INC.,
an Arizona corporation
By:_________________________________________
Xxxx Xxxxx, President
HEATH:
____________________________________________
XXXX XXXXX
ASSET PURCHASE AGREEMENT - Page 16
------------------------
