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EXHIBIT 2B
[LOGO] [TECH ELECTRO INDUSTRIES, INC. LETTERHEAD]
October 21, 1999
Xxxxxx Xxxxxxxxxx
PricewaterhouseCoopers, LLC.
000 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx Xxxxxx X0X 0X0
Re: Purchase Alphanet Hospitality Systems, Inc. ("AHS") by Tech Electro
Industries, Inc. ("Tele")
Dear Xx. Xxxxxxxxxx:
Contemporaneously with the execution of this letter, Tele is purchasing
from PricewaterhouseCoopers, LLC, Trustee of the Estate of AlphaNet
Telecom, Inc., a bankrupt, ("Trustee") all of the issued and outstanding
capital stock of AHS, (the "AHS Stock") and certain intellectual property,
copyrights and trademarks (the "AHS Property") all as more fully described
in that certain Bill of Sale executed and delivered by the Trustee
contemporaneously herewith. In accordance with our understanding and
agreement, the purchase price for the AHS Stock and the AHS Property is
US $3,450,000 plus a closing date extension fee of US $25,000 and a bridge
loan fee of US $25,000 for an aggregate consideration of US $3,500,000
("Purchase Price"). Also per our agreement, the Purchase Price is payable
to the Trustee, as follows:
(i) US $1,400,000 cash, heretofore delivered to and received by the
Trustee.
(ii) Delivery of that certain promissory note of Tele in the principal
amount of US $2,100,000 payable to the Trustee, a copy of which is
attached hereto as Exhibit A, and incorporated herein (the "Note").
Xxxx has pledged the AHS Stock to the Trustee to secure payment of
the Note and has executed a Pledge Agreement with respect thereto. To
further secure the Trustee per its request, Tele makes the following
covenants that shall remain in full force and effect until the Note
is paid in full:
(1) Tele shall not cause or allow AHS to upstream or pay any money or
capital to Tele without the prior written consent of the Trustee
unless AHS has in excess of US $100,000 cash on hand (the "Excess
Cash") and represents in writing to the Trustee that any such payment
upstreaming of capital will
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not impair AHS's ability to operate in the normal course of business;
provided however any cash upstreamed or paid to Tele by AHS shall not
exceed in any calendar month the lesser of (i) US $40,000 or (ii) the
Excess Cash; provided further, however, if Tele's receipt of any cash
or upstreaming of capital from AHS impairs AHS's ability to operate in
the normal course of its business, Tele will reimburse AHS the funds
necessary to enable AHS to operate in the normal course of its
business.
(2) Tele shall use its best efforts to refinance that certain indebtedness
of AHS, in the amount of US $2,525,000 incurred contemporaneously
herewith ("AHS indebtedness") and will regularly notify the Trustee of
its efforts and progress in this regard.
(3) Tele will use its best efforts to pay the Note in full or in part prior
to its maturity. Tele has started this process to obtain a loan to
repay the Note. Except for an initial principal payment on the AHS
indebtedness of up to US $150,000, ("AHS initial payment"), Xxxx
agrees to cause a principal payment to be made on the Note if a
principal payment is made on the AHS indebtedness in excess of the AHS
initial payment (the "excess AHS principal payment"). The amount of
the payment on the Note shall be equal to the percentage amount of the
excess AHS principal payment on the AHS indebtedness. For example, if
10% of the AHS outstanding principal is paid, 10% of the outstanding
principal of the Note shall be paid.
(4) Several weeks ago, Tele asked First Capital Services, Inc. ("FCS") to
deposit with the Trustee US $500,000 intended by FCS and Tele to be a
portion of a loan FCS agreed to make to AHS (the "FCS loan"), part of
the proceeds of which were to be used to pay the Trustee the full
purchase price for the AHS Stock and AHS Property. FCS defaulted on its
obligation to fund the FCS loan causing AHS and Tele to obtain
alternative financing including the deferred payment of the Purchase
Price, as evidence by the Note. Tele and AHS have been damaged by FCS's
said default and intend to prosecute their claims against FCS to
recover their respective damages. Tele acknowledges that said US
$500,000 is not and cannot constitute any part of the Purchase Price.
The Trustee acknowledges that it shall return the said US $500,000 to
FCS. In consideration thereof, Xxxx shall indemnify and hold harmless
the Trustee against any claims made by FCS against the Trustee with
respect to said US $500,000 and the FCS loan including the costs of
defending the Trustee against any such claims.
The occurrence of a default by Tele of any of its covenants, agreements or
other obligations herein shall constitute a default of the terms of the
Note, and in such case, the Trustee may, in its sole discretion, declare
the principal amount of the Note immediately due and payable.
The attached AHS Closing Statement (Exhibit B hereto and incorporated
herein), evidences the disbursements of the proceeds of the AHS
indebtedness, the Note and the said US $1,400,000 heretofore deposited with
the Trustee, that the Trustee acknowledges receipt of and to which it has
no objection. The Trustee also
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acknowledges that AHS does not owe any amount or indebtedness to the
Trustee, Alphanet Telecom, Inc. or any affiliate of Alphanet Telecom, Inc.,
after giving effect to the subject transaction.
If the foregoing is in accord with your understanding and agreement, please
so indicate by signing in the space provided below. Thank you.
Signed:
/s/ XXX XXXXXXX
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Xxx Xxxxxxx, Vice President
/s/ XXXXXX XXX
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XxxXxx Xxx, Secretary
Agreed:
PricewaterhouseCoopers, LLC
Trustee
/s/ XXXXXX XXXXXXXXXX
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By: Xxxxxx Xxxxxxxxxx
Vice President
