Exhibit 10.1
Form 10-QSB
Buyers United, Inc.
File No. 0-26917
AMENDMENT NO. 1
TO
ASSET PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 to the Asset Purchase Agreement dated December 20,
2002 is made and entered into this 6th day of June 2003, by and between Buyers
United Inc., a Delaware corporation, and Touch America, Inc., a Montana
corporation. The capitalized terms used in this Amendment and not otherwise
defined or redefined herein shall have the meaning given such terms in the Asset
Purchase Agreement dated December 20, 2002 by and between the parties to this
Amendment (the "Agreement").
Recitals
A. Under the Agreement the Buyer agreed to purchase and the Seller agreed
to sell the Acquired Assets, which included the Customer Accounts for switched
voice long distance service.
B. In the course of transition and transfer of the Customer Accounts, the
Parties discovered certain inaccuracies in the Customer Accounts, which were
conveyed under the xxxx of sale attached as Exhibit A to the Agreement. As a
result the Buyer did not receive under the Agreement all of the Customer
Accounts and value provided for in the Agreement and the parties desire to amend
the Agreement accordingly.
C. The Seller desires to sell to Buyer and Buyer desires to purchase from
Seller additional Customer Accounts consisting of customers that purchase from
Seller switched voice long distance service and dedicated long distance service.
Agreement
In consideration of the foregoing recitals and the mutual promises
contained herein, and intending to be legally bound, the Parties agree as
follows:
1. Acquired Assets. The definition of "Acquired Assets" set forth in
Article I of the Agreement is hereby amended to read as follows:
"Acquired Assets" means
(a) The switched voice long distance customer accounts and dedicated
long distance customer accounts listed on Schedule I to the Restated Xxxx
of Sale contemplated by Section 1.4 attached hereto as Exhibit A that are:
(i) the customer accounts transferred and delivered as of February 1, 2003
by Seller to Buyer under the Purchase Agreement (the "Original Accounts");
and (ii) the additional customer accounts to be purchased by Buyer from
Seller under Amendment No. 1 to the Purchase Agreement listed on Schedule I
to the Restated Xxxx of Sale that (x) were not terminated by Seller prior
to the date transferred to Buyer, (y) have not been rejected by Buyer prior
to August 1, 2003, as it may determine in its sole discretion, and (z) are
transferred to Buyer so that the customer is included in Buyer's long
distance call detail reports (CDR) for the month of August 2003, or are
transferred to Buyer after August 2003 as contemplated by Section 7 of
Amendment No. 1 to this Agreement so that the customer is included in
Buyer's CDR after August 2003 (the "New Accounts")(the Original Accounts
and New Accounts are collectively referred to as the "Customer Accounts");
(b) All customer data associated with the Customer Accounts now in the
possession of Seller or hereafter comes into the possession of Seller,
including all associated letters of authorization, customer service
contracts, customer service records, all related computer tapes and/or
records, accounts receivable status and history reports, and all customer
service and provisioning history; and
(c) The Carrier Identification Codes 0244 and 0335.
2. Final Accounts List. The definition of "Final Accounts List" is hereby
deleted from the Agreement:
3. Purchase Price. Section 1.3 of the Agreement is hereby superceded and
replaced by the following:
1.3. Purchase Price.
Subject to the terms and conditions of this Agreement, Buyer agrees to
pay to Seller for all of the Acquired Assets an amount (the "Acquired
Accounts Price") equal to the sum of: $6,098,000; and 2.5 times the August
2003 pro forma aggregate long distance service amount. For purposes of this
provision the "August 2003 pro forma long distance service amount" is the
sum of: the aggregate long distance service charges (exclusive of monthly
recurring charges for the actual local exchange carrier cost for the local
access loops, actual Universal Service Fund charges exclusive of
administrative fees, Federal, state and local taxes assessed for or on long
distance service or usage, and other non-usage related xxxxxxxx) on Buyer's
August 2003 call detail records (CDR) for all customers of the New Accounts
with a Transfer Date (as defined in paragraph 6 of this Amendment, below)
that falls on or before August 1, 2003; and, for each customer of a New
Account with a Transfer Date that occurs during the period commencing
August 2, 2003 and ending August 31, 2003, the product obtained by
multiplying the long distance service charges for each such customer
(exclusive of monthly recurring charges for local access loops, Universal
Service Fund charges, taxes, and other non-usage related xxxxxxxx) on
Buyer's August 2003 CDR by a fraction, the numerator of which is 31 and the
denominator of which is the number of days from and including the Transfer
Date of each such customer to August 31, 2003, inclusive. The Acquired
Accounts Price shall be increased by the amount, if any, of the purchase
price for Post-August Accounts as provided in Section 7 of Amendment No. 1
to this Agreement. The Acquired Accounts Price is payable as follows:
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(a) $3,318,166.32 in cash to Seller the payment of which has
been made to Seller and the receipt of which is acknowledged by
Seller;
(b) $1,700,000 in cash to Seller on June 6, 2003 by wire
transfer to a bank account designated by Seller; and
(c) an amount equal to 7.2 percent of Collections payable
monthly in accordance with the procedure set forth in Section 5.3
until the sum of the aggregate amount paid under Sections 1.3(a),
(b) and (c) equals the Acquired Accounts Price.
Buyer covenants and agrees that from and after each Management Date
Buyer assumes and is responsible for the Assumed Liabilities pertaining to
the Customer Accounts that correlate to each Management Date to the fullest
extent permitted by Law.
4. Deliveries and Effective Date. Section 1.4 of the Agreement is hereby
amended by the addition of Section 1.4(f), which provides as follows:
(f) The "Amendment No. 1 Effective Date" is June 6, 2003. On the
Amendment No. 1 Effective Date, Seller shall deliver to Buyer the Restated
Xxxx of Sale in the form attached hereto as Exhibit A, which supercedes and
replaces the original general conveyance and xxxx of sale attached as
Exhibit A to the Agreement, and such additional instruments, letters of
instruction, assignments, and authorizations required for the transfer of
the New Accounts from Seller to Buyer and vest in Buyer good title to the
Acquired Assets, subject only to obtaining Approvals from Governmental
Entities or the consent of customers in the New Accounts that have
contracts requiring their consent to assignment of their contracts. On the
Amendment No. 1 Effective Date, Buyer shall make the payment provided for
in Section 1.3(b), above, which is due on that date.
5. Lockbox Arrangement. Section 5.3 of the Agreement is hereby superceded
and replaced by the following:
Section 5.3 Escrow Arrangement
On or before June 6, 2003, the Parties will enter into an escrow
account agreement that will provide:
(a) Payment to Seller out of the escrow account on a monthly basis 7.2
percent of Collections as contemplated by Section 1.3(c); and
(b) Payment to Buyer or Buyer's receivables lender of all amounts not
paid to Seller under Sections 5.3(a).
6. Transition Matters. Buyer shall use its reasonable best efforts to move
billing and provisioning of the New Accounts as soon as possible following the
Amendment No. 1 Effective Date, but in any event before August 31, 2003. Seller
shall use its reasonable best efforts to service and maintain the New Accounts
prior to the date provisioning is moved to Buyer, and shall provide all
reasonable assistance requested by Buyer to effect in an orderly manner the
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transition of billing and service of the New Accounts from Seller to Buyer. From
the date the New Account is provisioned to Buyer's services and the right to
xxxx services is transferred from Seller to Buyer (the "Transfer Date"), Buyer
shall be solely responsible for billing and customer service of the transferred
New Account, and shall assume and be liable for all cost of service and expenses
associated with provisioning the transferred New Account that arise on and after
the Transfer Date. In the event Seller receives any payment for any Buyer
invoice or has in its possession any payment data pertaining to payments
received on the Customer Accounts for any Buyer invoice, Seller shall promptly
remit such payments to the escrow account provided for in Section 5 of the
Agreement and payment data to Buyer. In the event Buyer receives any payment for
any Seller invoice or has in its possession any payment data pertaining to
payments received on the Customer Accounts for any Seller invoice, Buyer shall
promptly remit such payments and payment data to Seller. Buyer does not assume,
or have any responsibility or liability for, any receivables on a transferred
New Account that arise prior to the Transfer Date or for any account credit or
other liability of a transferred New Account that accrues prior to the Transfer
Date. Buyer is not entitled to the benefit of any debit balance on a transferred
new Account that accrued prior to the Transfer Date. Neither Buyer nor the
customers serviced under the New Accounts will have responsibility for any cost
and/or termination liability for access circuits or cross-connects that are
provisioned to Seller's switch network and are disconnected by Seller following
the Transfer Date, and Seller agrees and acknowledges that it will be solely
responsible for all such costs and liabilities.
7. Post-August Transfers. In the event any additional customer account
listed on Schedule I to the Restated Xxxx of Sale is transferred from Seller to
Buyer after August 2003 (a "Post-August Account"), Buyer shall, nevertheless,
purchase the Post-August Account and the Acquired Accounts Price shall be
increased as a result of such purchase by an amount equal to 2.5 times the long
distance service charges for the Post-August Account (exclusive of monthly
recurring charges for actual local exchange carrier cost for the local access
loops, actual Universal Service Fund charges exclusive of administrative fees,
Federal, state and local taxes assessed for or on long distance service or
usage, and other non-usage related xxxxxxxx) on Buyer's call detail records for
the first full calendar month following the Transfer Date of the Post-August
Account.
8. Release of Seller. Buyer hereby forever waives and releases any right of
indemnification it may have under the Agreement and any other right of action
Buyer may have at law or in equity against Seller for Losses, whether fixed or
contingent, known or unknown, that are directly or indirectly the result of, or
based upon, any claim by Buyer that Seller failed to deliver any of the Customer
Accounts provided for in the Agreement as in effect prior to this Amendment.
9. Receivables. The Seller agrees and acknowledges that all receivables due
and payable to Seller under Section 5.2 of the Agreement have been paid in full,
and Buyer has no liability or further duty or payment obligation to Seller there
under.
10. Related Agreements. Buyer and Seller each agrees and acknowledges that
the other party has performed its obligations in full under the Transition
Services Agreement and Management Agreement, both dated December 20, 2002 and
attached as exhibits to the Agreement, and neither party has any further
obligation to the other party or claim against the other party in respect
thereof.
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11. Authorization of Transaction By Seller. Seller has full power and
authority (including full corporate power and authority) to execute and deliver
this Amendment and to perform its obligations hereunder. The execution and
delivery of this Amendment and the performance by Seller and the consummation of
the transactions contemplated hereunder have been duly authorized by the board
of directors of Seller and no other corporate proceedings on the part of Seller
are necessary to authorize this Amendment and the transactions contemplated
hereunder. Except as otherwise provided herein, no consent of any Person not a
Party to this Amendment nor consent of or filing with (including any waiting
period) any Governmental Entity is required to be obtained or performed on the
part of Seller to execute, deliver and perform its obligations hereunder, except
where the failure to obtain any consent or make any filing would not reasonably
be expected to have a Material Adverse Effect.
12. Authorization of Transaction By Buyer. Buyer has full power and
authority (including full corporate power and authority) to execute and deliver
this Amendment and to perform its obligations hereunder. The execution and
delivery of this Amendment and the performance by Buyer and the consummation of
the transactions contemplated hereunder have been duly authorized by the board
of directors of Buyer and no other corporate proceedings on the part of Buyer
are necessary to authorize this Amendment and the transactions contemplated
hereunder. Except as otherwise provided herein, no consent of any Person not a
Party to this Amendment nor consent of or filing with (including any waiting
period) any Governmental Entity is required to be obtained or performed on the
part of Buyer to execute, deliver and perform its obligations hereunder, except
where the failure to obtain any consent or make any filing would not reasonably
be expected to have a Material Adverse Effect.
13. Ratification. In all respects, other than as specifically set forth in
this Amendment, the Agreement shall remain unaffected by this Amendment and
shall continue in full force and effect. In the event of any conflict,
inconsistency, or incongruity between the provisions of this Amendment and the
provisions of the Agreement, the provisions of this Amendment shall in all
respects govern and control. This Amendment may be executed in any number of
duplicate originals or counterparts, each of which when so executed shall
constitute in the aggregate but one and the same document.
IN WITNESS WHEREOF, each of the Parties hereto has caused this Amendment to
be executed by its duly authorized officers as of the day and year first above
written.
BUYERS UNITED, INC.
By: /s/ Xxxx Xxxxxx, President
TOUCH AMERICA, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
President
Chief Operating Officer
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Exhibit A to
Amendment No. 1
RESTATED XXXX OF SALE, ASSIGNMENT
AND GENERAL CONVEYANCE
STATE OF MONTANA }
: ss
COUNTY OF }
KNOW ALL MEN BY THESE PRESENTS:
This Restated Xxxx of Sale, Assignment and General Conveyance
("Assignment") is executed and delivered on June 6, 2003, from Touch America,
Inc., a Montana corporation, ("Seller") to Buyers United, Inc., a Delaware
corporation ("Buyer"), and supercedes and replaces the Xxxx of Sale, Assignment
and General Conveyance dated December 20, 2002 given by Seller to Buyer.
W I T N E S S E T H:
WHEREAS, Pursuant to the terms and conditions of the Asset Purchase
Agreement between the parties dated December 20, 2002 and as amended by
Amendment No. 1 thereto dated June 6, 2003 (collectively the "Agreement") Seller
is selling to Buyer, and Buyer is purchasing from Seller, certain assets of
Seller listed on Schedule I hereto (which represents the "Acquired Assets" as
defined in the Agreement);
NOW, THEREFORE, for good and valuable consideration described in the
Agreement, the receipt, adequacy and sufficiency of which are hereby
acknowledged, and of the premises, mutual covenants, and agreements of the
Parties:
1. Conveyance and Delivery. Seller does hereby convey, grant, bargain,
sell, transfer, set over, assign, deliver, and release unto Buyer and Buyer's
successors and assigns to have and hold forever, good and marketable title to
the Acquired Assets as listed and described in the Agreement and Schedule I
hereto.
2. Further Assurances. Seller agrees to execute and deliver to Buyer any
certificates, instruments, releases, and other documents reasonably required to
further assure Buyer with respect to, and provide Buyer evidence of its full
right, title, and interest in and to, the Acquired Assets.
3. Definitions. This Assignment is subject to all the terms and conditions
of the Agreement. All defined terms in the Agreement have the same meaning
herein as set forth in the Agreement.
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IN WITNESS WHEREOF, this Restated Xxxx of Sale, Assignment and General
Conveyance has been duly executed and delivered on the 6th day of June 2003.
TOUCH AMERICA, INC.
By: ________________________________
Xxxxxxx X. Xxxxxxx
President
Before me, the undersigned, a Notary Public, in and for said County and
State, on this 6th day of June 2003, personally appeared Xxxxxxx X. Xxxxxxx, to
me known to be the identical person who subscribed the name of Touch America,
Inc., to the foregoing instrument by authority of its board of directors and
acknowledged to me that he executed the same as the act and deed of said
corporation by authority of its board of directors.
------------------------------------
Notary Public
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Schedule I to
Restated Xxxx of Sale, Assignment
and General Conveyance
Acquired Assets
1. The following switched voice long distance customer accounts and dedicated
long distance customer accounts:
(a) All Original Accounts included in the Customer Accounts listed on the
compact disc marked "TA Original Accounts," which is initialed by Xxxx Xxxxxx,
President of Buyers United, Inc., and Xxxxxxx X. Xxxxxxx, President of Touch
America, Inc., and the transfer of said Original Accounts is effective as of the
applicable dates of the Interim Closings and Final Closing; and
(b) The New Accounts included in the Customer Accounts listed on the
compact disc marked "TA New Accounts," which is initialed by Xxxx Xxxxxx,
President of Buyers United, Inc., and Xxxxxxx X. Xxxxxxx, President of Touch
America, Inc., that are
(x) not terminated by Seller prior to the date transferred to Buyer,
(y) not rejected by Buyer in the exercise of its sole discretion prior
to August 1, 2003, and
(z) transferred to Buyer so that the customer is included in Buyer's
long distance call detail reports (CDR) for the month of August 2003, or
are transferred to Buyer after August 2003 as contemplated by Section 7 of
Amendment No. 1 to the Agreement so that the customer is included in
Buyer's CDR after August 2003,
and the transfer of each New Account is effective automatically on the date the
New Account is provisioned to Buyer's services and the right to xxxx services is
transferred from Seller to Buyer.
2. All customer data associated with the Customer Accounts now in the possession
of Seller or hereafter comes into the possession of Seller, including all
associated letters of authorization, customer service contracts, customer
service records, all related computer tapes and/or records, accounts receivable
status and history reports, and all customer service and provisioning history.
3. The Carrier Identification Codes 0244 and 0335.
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