EXHIBIT 10.9
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") dated December 20, 1996 is by
and among the following:
a) SKYLINK TELECOMMUNICATIONS CORPORATION, a Nevada Corporation
herein referred to as the "Buyer"; and
b) COMTEL COMPUTER CORP., a Nevada corporation, and CALIFORNIA
COMTEL COMPUTER, INC., a California Corporation, both of which may be
hereinafter collectively referred to herein as the "Company" or
"Companies";
c) Davel Communications Group, Inc. (Selling Shareholder) who is
referred to herein as the "Seller" or "Selling Shareholder" and who is
represented by Xxxxxxxx X. Xxxxxxxxxx, Xx. as agent, who is referred to
herein as the "Seller's Agent" with reference to the following
circumstances:
WHEREAS The Company operates and has under contract phones in hotels and
other similar operations for which it provides VoicePro, PBX equipment and
Operator Services, hereafter referred to as "Hospitality" services;
WHEREAS the Buyer desires to purchase all of Selling Shareholder's interest
in the Company;
WHEREAS the Selling Shareholder owns 100% of the issued and outstanding
shares of COMTEL COMPUTER, CORP., consisting of 20,948,529.54 shares, and 100%
of the issued and outstanding shares of CALIFORNIA COMTEL COMPUTER, INC.,
consisting of 9,350 shares, said shares being all of the issued and outstanding
shares of both corporations. All of said shares are hereafter referred to as the
"Transferred Shares."
WHEREAS Xxxxxxxx X. Xxxxxxxxxx, Xx. as Seller's Agent, is the authorized
attorney-in-fact for the Selling Shareholder with the power to sign, execute,
acknowledge, deliver, and receive this Stock Purchase Agreement and such
contracts, agreements, options, covenants, deeds, conveyances, bills of sale,
leases, assignments, insurance policies, checks, stock certificates, proxies,
warrants, commercial paper, and such other instruments of whatever kind and
nature as may be necessary or proper for the completion of this transaction.
Attached hereto at Exhibit A is a Power of Attorney evidencing such authority;
and
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:
Purchase and Sale of Stock. Subject to the terms and conditions herein
set forth, on the Closing Date (as hereinafter defined), Buyer agrees to
purchase from Seller 9,350 shares in
California ComTel Computer, Inc. for the sum of $1,000.00 and
20,948,529.54 shares in ComTel Computer Corp. for $5,003,000 adjusted for
certain pre-agreement items ("Pre-Agreement Items") set forth at Schedule 1
all payable and more fully described as follows:
Seller has previously entered into an escrow agreement dated April 25,
1996 at Farmers State Bank and Trust Company whereby Buyer has paid into
escrow certain sums as a good faith deposit for the performance of the
transaction contemplated by this Agreement. Upon Closing, all of said funds
in escrow shall be released by Letter of Direction to Buyer; and
The sum of $2,703,000 as adjusted for the Pre-Agreement Items, which
adjusted sum is referred to herein as the "First Escrow Deposit," by
deposit with the Escrow Agent (as hereafter defined) in available funds on
or before December 31, 1996; and
The additional sum of $2,300,000 by deposit with the Escrow Agent in
available funds no later than the earlier of December 31, 1997 or within
ten days of closing and receipt of funds from the underwriter of an Initial
Public Issue of stock by Buyer. This additional sum shall be subject to
adjustment as hereafter provided at paragraph 9.1.3 and, as so adjusted,
shall bear interest at 9.75% per annum, compounded daily, until deposited
with the Escrow Agent. Said additional sum plus interest and after
adjustments is referred to herein as the "Second Escrow Deposit." At
Seller's sole discretion the Second Escrow Deposit may be made in Common
Stock of Seller valued at the price set for such stock by Seller's
underwriter on the date of first issuance to the public.
Security Interest in Assets. At Closing, the Buyer shall cause Comtel
Computer Corp. to grant Seller a security interest in all equipment of
Comtel Computer Corp. and all accounts and accounts receivable arising from
the transmission of telecommunications traffic from customers as of the
date of Closing (including proceeds and substantially equivalent
replacements) to secure the payment of the Second Escrow Deposit. Said
security interest shall not be subordinate to any interests created by
Buyer at any time or by Comtel Computer Corp. at or after Closing except
for such purposes related to the financing of the capital expansion or on
going business operations of Comtel Computer Corp. to which Seller has
given its written consent for subordination of its interests. Seller shall
not unreasonably withhold such consent, but in evaluating any request for
subordination Seller may, in addition to other factors, consider the
intended use of proceeds, Seller's own obligations to Boatmen's National
Bank of St. Louis (or any successor institution) and the impairment of its
collateral. Without Seller's consent Comtel Computer Corp. may finance
acquisition of new assets by Purchase Money Security interest in the assets
acquired. The security interest contemplated by this paragraph 1.3.1 shall
be granted by Security Agreement substantially as set forth at Schedule
1.3.1
Security Interest in the Transferred Shares. This Agreement in its
entirety shall constitute a Security Agreement or Pledge by Buyer of the
Transferred Shares to secure the Payment of the Second Escrow Deposit.
Collateral. Buyer hereby grants to Seller a security interest in the
Transferred Shares to secure payment of the Second Escrow Deposit.
Perfection. Pending payment of the Second Escrow Deposit, Seller shall
transfer the shares to the Escrow Agent, pursuant to an escrow agreement
("Escrow Agreement") substantially in the form as set forth at Schedule
1.3.2.2.
Sale or Encumbrance. Buyer shall not, without the written consent of
the Secured Party, sell, contract to sell, assign, lease, encumber or
dispose of the Transferred Shares or any interest therein until this
Agreement and all debts secured by it have been fully satisfied.
Remedies. Upon the failure of Buyer to timely pay the Second Escrow
Deposit the Seller and Buyer shall within three days after written demand
for such payment by Seller direct the Escrow Agent to deliver the
Transferred Shares to Seller as Seller's own property free and clear of all
encumbrances whether arising out of this Agreement or otherwise.
Voting Rights in the Transferred Shares. At Closing Seller shall
deliver to Buyer a proxy to vote the transferred shares substantially in
the form as set forth at Schedule 1.3.3 which Proxy shall provide that
Seller shall have all voting rights in respect of the Transferred Shares
during such periods as Buyer is not in "Material Breach," hereafter
defined. For the purposes of this paragraph 1.3.3, a "Material Breach"
shall mean any breach of warranty, or nonfulfillment or failure to perform
any material obligation on the part of the Buyer under this Agreement, The
Telecommunications Services Agreement set forth at Schedule 4.1 or The
Security Agreement set forth at Schedule 1.3.1 which continues without cure
for more than 30 days after written Notice by Seller referencing this
paragraph which specifies the breach of warranty, or the nonfulfillment or
failure to perform a material obligation.
Delivery of Shares and Payment. Subject to the conditions set forth in
this Agreement, on or before December 31, 1996, Buyer shall deposit with
the Escrow Agent, subject to the terms of the Escrow Agreement, the First
Escrow Deposit. After the Buyer has made the First Escrow Deposit and on or
before December 31, 1996 Seller shall deliver, subject to the terms of the
Escrow Agreement, to the Escrow Agent the Transferred Shares and the
undated, fully executed stock powers authorizing the transfer of shares to
the Buyer ("Stock Powers"). Further, Seller shall cause to be delivered on
or before December 31, 1996 forms UCC-3, fully executed and suitable for
filing which release all security interests of Boatmen's National Bank of
St. Louis in the assets of the Companies ("Boatmen's Lien Releases"). On
December 31, 1996 and otherwise in accordance with the terms of the Escrow
Agreement, the Buyer and Seller shall direct the Escrow Agent to pay to the
Seller the First Escrow Deposit and transfer to Buyer the Boatmen's Lien
Releases. When required by paragraph 1.3 Buyer shall deposit the Second
Escrow Deposit in available funds with the Escrow Agent. At such time and
otherwise in accordance with the terms of the Escrow Agreement to the Buyer
and Seller shall direct the Escrow Agent to deliver the Transferred Shares
and Stock Powers to Buyer and the Second Escrow Deposit to Seller.
Closing Date. The closing ("Closing") of the transaction provided in
this Agreement shall be conducted through escrow as provided above and
shall take place on December 31, 1996 ("Closing Date") in accordance with
the terms of this Agreement and the Escrow Agreement.
Transition Matters and Continuing Relationship.
Carrier Services. Seller and the Companies currently utilize and share
a telecommunications network which consists of various elements, including
but not limited to shared contracts for transmission and billing and
clearing and state tariffs. Further, the Companies utilize the switching
equipment and certain services of an Inter-Exchange Carrier which is a
wholly-owned subsidiary of Seller, Phone Zone, Inc. ("PZI"). For a period
of one year after the date hereof, Seller and Buyer shall continue to allow
the use of their contracts for transmission and billing and clearing and
state tariffs on a common basis. Further, ComTel Computer Corp. and Seller
shall enter into a telecommunications services agreement
("Telecommunications Services Agreement") effective January 1, 1997 whereby
Seller shall provide the Companies telecommunications services
substantially as provided as of the date of this Agreement at the existing
rate structure, subject to adjustment for increases in Seller's costs, for
such services until January 1, 1998. Said Telecommunications Services
Agreement shall provide for a security deposit of one month's charges to
ensure full and timely payment to Seller and its subsidiaries. The
Telecommunications Services Agreement shall be in the form as set forth at
Schedule 4.1.
Access to Records. The parties shall each allow the other reasonable
access to the books and records of the other as may be required from time
to time.
Covenant Not to Compete. For a period of two years from Closing,
Seller shall not solicit customers of the Companies with whom the Companies
have a contractual relationship for telecommunications services for the
provision of similar services and otherwise as set forth in a
Noncompetition Agreement as set forth at Schedule 4.3.
Intercompany Transfers. As of an effective date prior to the "Balance
Sheet Date" (as hereafter defined) Seller shall have eliminated all
intercompany account balances by way of transfer of intercompany account
balances. Further, after the Balance Sheet Date and prior to the Closing
Date, Seller may eliminate subsequently accrued intercompany account
balances by way of transfer of such account balances, but in no event shall
it reduce the current assets of the Companies to an amount less than the
current liabilities of the Companies.
Representations and Warranties of Seller.
Title to Shares. Seller represents and warrants that the Selling
Shareholder has good and marketable title to the Transferred Stock required
to be transferred pursuant to this Agreement, free and clear of all liens,
claims, encumbrances, and restrictions of every kind; and the Selling
Shareholder has the complete and unrestricted right, power, and authority
to sell, transfer, and assign the Transferred Stock required to be
transferred pursuant to this Agreement.
Stock Rights. Seller represents and warrants that as of the Closing
there shall be no presently outstanding warrants, options, contracts,
commitments, warranties, agreements, incentive stock option plans, Employee
Non-Qualified Stock Option Plan or other rights of any character affecting
or relating in any manner to the issuance of the Companies' capital stock
or other securities, or entitling anyone to acquire the capital stock or
other securities of the Companies (hereinafter collectively referred to as
"Options") and as of the Closing all Options shall have been terminated or
assigned to Buyer.
Organization. Seller represents and warrants that ComTel Computer
Corp. is a duly organized and validly existing Nevada corporation in good
standing, with all requisite power and authority to carry on its business
as currently conducted. Seller represents and warrants that California
ComTel Computer, Inc. is a duly organized and validly existing California
corporation in good standing, with all requisite power and authority to
carry on its business as currently conducted.
Qualification. Except as set forth at Schedule 5.4, Seller represents
and warrants that the Companies are duly qualified as foreign corporations
in good standing in each jurisdiction where the nature of their activities
or its properties owned or leased makes qualification necessary and in
which the failure to qualify will have a materially adverse effect. Seller
hereby agrees to cause Comtel Computer Corp. to become qualified to do
business in all states set forth at Schedule 5.4 at the sole expense and
effort of Seller prior to January 31, 1997.
Tariffs. Except as provided at Schedule 5.5, Seller represents and
warrants that the Companies are duly tariffed and qualified to conduct
their telecommunications operations in accordance with the rates charged
and the services provided under the laws of the United States and the
regulations promulgated by the Federal Communications Commission and under
the laws of each state or other jurisdiction in which it operates and the
applicable regulations of each applicable Public Utility Commission,
Commerce Commission or similar agency therein. At Schedule 1, Seller has
credited Buyer with certain sums to compensate Buyer for the expense of the
Companies in updating the tariffs set forth at Schedule 5.5.
Capitalization. Seller represents and warrants that ComTel Computer
Corp. is authorized to issue 30,000,000 shares of common stock, with no par
value, of which 20,948,529.54 are duly and validly issued and outstanding.
Seller represents and warrants that California ComTel Computer, Inc. is
authorized to issue 10,000 shares of common stock, with no par value, of
which 9,350 shares are duly and validly issued and outstanding;
Indebtedness. Seller represents and warrants that except for trade
accounts payable incurred in the ordinary course of business and except as
set forth at Schedule 5.7 there is no long term or material short term
indebtedness for borrowed money, bond, note, debenture, mortgage, pledge,
security agreement, conditional sale agreement, equipment trust agreement,
letter of credit agreement, loan agreement or contract or commitment of the
Companies for the borrowing or lending of money (including without
limitation, loans to or from officers, directors or any members of their
immediate families), and the Companies are not in any default of any
provision of such outstanding long term or material short term obligations.
Seller represents and warrants that it has delivered to Buyer true copies
of all instruments relating to
the long term and material short term indebtedness for borrowed money and
obligations set forth at Schedule 5.7.
Financial Statements. As set forth at Schedule 5.8 Seller has
furnished Buyer with Financial Statements for the Companies consisting of a
Certified Audit for the fiscal year ending December 31, 1995 ("Certified
Audit") and an unaudited statement for the stub period ending October 31,
1996. The aforesaid Financial Statements may be referred to herein as the
"Financial Statements" and October 31, 1996 may be referred to herein as
the "Balance Sheet Date." Seller represents and warrants that to the best
of Seller's knowledge the Financial Statements are in accordance with the
books and records of the Companies, fairly present the financial condition
of the Companies at such dates and the results of its operations for the
periods specified, in accordance with generally accepted accounting
principles applied on a basis consistent with prior accounting periods.
Fixed Asset List. Attached at Schedule 5.8.1 is a fixed asset list of
the Companies dated December 16, 1996. Seller warrants that this list is
accurate and correctly states the assets of the Companies.
Present Status. Seller represents and warrants that the Companies,
since the Balance Sheet Date, and except as set forth at Schedule 5.9, have
not done any of the following:
Incurred any obligations or liabilities except current
liabilities in the ordinary course of business;
Discharged or satisfied any liens or encumbrances, or paid any
obligations or liabilities, except current balance sheet liabilities
and current liabilities incurred since the Balance Sheet Date in the
ordinary course of business;
Declared or made any shareholder payment or distribution or
purchased or redeemed any of their securities or agreed to do so;
Mortgaged, pledged, or subjected to lien, encumbrance, or charge
any of its assets except for such liens as are created pursuant to the
Companies' ongoing financing arrangement with Zero Plus Dialing, Inc.
(ZPDI);
Canceled any debt or claim;
Sold or transferred any assets except from inventory in the
ordinary course of business;
Suffered any damage, destruction, or loss (whether or not covered
by insurance) materially affecting its properties, business, or
prospects;
Waived any rights of substantial value;
Amended its Articles of Incorporation or Bylaws;
Effected any change in the authorized and unissued stock;
Acquired, redeemed, issued or disposed of any shares of stock of
any class or description, granted any options, warrants or other
rights for the issuance thereof;
Merged, consolidated, liquidated, dissolved, reorganized, sold or
otherwise disposed of substantially all of their assets;
Made any loan or advance to any officer, director, employee,
consultant, representative, salesman or agent of the Companies;
Changed the accounting methods or practices followed by the
Companies, or changed the depreciation or amortization policies or
rates used;
Made any unlawful payment to governmental or quasi-governmental
officials, or payments to customers or suppliers for rebating of
charges;
Entered into any transaction other than in the ordinary course of
business.
Taxes. Except as set forth at Schedule 5.10, Seller represents and
warrants that the Companies have duly filed all federal, state, and local
income tax, excise tax, sales tax, use tax, gross receipts tax, franchise
tax, employment tax, payroll tax, withholding tax, real property tax,
personal property tax and all other tax returns required to be filed by
them and have paid all such federal, state, and local taxes required to be
paid with regard to the periods covered by the returns. As of Closing Date,
Seller represents and warrants that the Companies are not delinquent in the
payment of any tax, assessment, or governmental charge; have no tax
deficiencies proposed or assessed against them; have not executed any
waiver of the statute of limitations on the assessment or collection of any
tax; and are not currently under audit by the Internal Revenue Service or
state tax authorities for any years subject to adjustment. There are not in
force any extensions of time with respect to the dates on which any tax
return was or is due to be filed by the Companies or any waivers or
agreements by the Companies for an extension of time for the assessment or
payment of any tax. With respect to any such extensions it shall be the
obligation of Seller to prepare, file and pay any such returns and taxes.
In the event that after Closing a deficiency is determined in the amount of
any tax payable by the Companies relating to periods prior to Closing,
Seller shall be liable for the payment of any deficiency attributable to
periods prior to Closing determined in the following manner:
To the extent permitted by applicable law, the parties hereto
agree to cause state and local tax periods of each of the Companies to
be closed at the close of business on the Closing Date. In the event
applicable law does not permit the closing of any such period, the
allocation of tax liability shall be made in accordance with Section
5.10.2.
For the purposes of this Section 5.10 "Code" means the Internal
Revenue Code of 1986, as amended.
For the purposes of this Section 5.10 "Post-Closing Tax Period"
means (i) any taxable period beginning on or after the Closing Date.
For the purposes of this Section 5.10 "Pre-closing Tax Period"
means any taxable period commencing on a day before the Closing Date.
Lawsuits and Proceedings. Seller represents and warrants that to the
best of Seller's knowledge there are no lawsuits or administrative
proceedings pending or threatened against the Companies or affecting any of
their properties or rights, other than those more fully described at
Schedule 5.11.
Compliance with Law and Instruments. Seller represents and warrants
that to the best of Seller's knowledge the business and operation of the
Companies have been and are being conducted in accordance with all
applicable laws, rules, and regulations of all authorities, except those
that do not materially and adversely affect the Companies or its
properties, assets or businesses; the performance of this Agreement will
not result in any material breach of, constitute a default under, or result
in the imposition of any lien or encumbrance on any property of the
Companies under any agreement or other instrument to which the Companies or
Seller is a party or by which either is bound or affected, and will not
materially violate the articles of incorporation or the bylaws of the
Companies; and the Companies are not, and will not be by virtue of the
transaction contemplated in this contract, materially in violation of their
articles of incorporation, their bylaws, or of any indebtedness, mortgage,
contract, lease, or other agreement.
Good Title. Seller represents and warrants that except with respect to
assets held under leases and licenses the Companies have good, absolute,
and marketable title to all of their properties and assets, subject to no
mortgage, pledge, lien, charge, security interest, encumbrance, or
restriction except those revealed on the Financial Statements at Schedule
5.8 and except for such liens incurred in favor of Billing Information
Concept, Inc., formerly ZPDI and referred to herein as "ZPDI," pursuant to
the Companies' ongoing financing arrangements with ZPDI.
Condition of Tangible Assets. Seller represents and warrants that to
the best of Seller's knowledge all of the equipment of the Companies is in
good condition and repair, reasonable wear and tear excepted, and that to
the best of Seller's knowledge the Companies have not been threatened with
any action or proceeding under any building or zoning ordinance,
regulation, or law which has not been withdrawn or which is not being
contested in good faith.
Patents and Trademarks. Seller represents and warrants that to the
best of Seller's knowledge: the Companies own, possess, and have good title
to all copyrights, trademarks, trademark rights, patents, patent rights,
and licenses necessary to the conduct of their business; the Companies are
not materially infringing on or otherwise acting materially adversely to
the rights of any person under or in respect to any copyrights, trademarks,
trademark rights, patents, patent rights, or licenses owned by any person
or persons; there is no claim or pending or threatened action with regard
to any alleged infringement or related violation; the Companies are not
obligated to pay any royalties or fees to any licensee or other
claimant to any patent trademark, trade name, copyright, or other
intangible asset; and the Companies have the unrestricted right to use all
trade secrets, customer lists, manufacturing and other processes incident
to the manufacture, use, or sale of any and all products and services
currently sold by them.
Contracts. Seller represents and warrants that except as set forth at
Schedule 5.16 the Companies have not issued or received any written notice
of breach or default in respect of contracts, agreements, leases,
documents, or other commitments to which it is a party or by which it is
otherwise bound or affected. Further Seller represents and warrants that
except as set forth at Schedule 5.16 it has no knowledge of any material
breach or default in respect of any contracts, agreements, leases,
documents, or other commitments to which it is a party or by which it is
otherwise bound or affected. Seller represents and warrants that to the
best of Seller's knowledge except as set forth at Schedule 5.16 the
Companies are not a party to, or otherwise bound by, any of the following
kinds of contracts:
Any written or oral contract not made in the ordinary course of
business;
Any employment or consultant contract not terminable at will
without cost or other liability;
Any labor union contract, bonus, pension, profit sharing,
retirement, share purchase, stock option, hospitalization, group
insurance, or similar employee benefit plan;
Any real or personal property lease, as lessor or lessee;
Any advertising or public relations contract;
Any purchase, supply, or service contract for a price exceeding
$5,000.00 that is not terminable without cost or expense on less than
30 days' notice. This paragraph does not apply to any contract with
hospitality locations for the provision of telecommunications
services;
Any deed of trust, mortgage, conditional sales contract, security
agreement, pledge agreement, trust receipt, or any other agreement or
arrangement under which any of the assets or properties of the
Companies are subject to a lien, encumbrance, charge, or other
restriction;
Any license agreement, whether as licensee or licensor;
Compensation of Officers and Others. Seller represents and warrants
that since the Balance Sheet Date, there has not been any material change
in any compensation, commission, bonus, or other remuneration payable to
any officer, director, agent, employee, or consultant of the Companies,
except for increases in the ordinary course of business consistent with
prior practice.
Inventories. Seller represents and warrants that the inventories of
the Companies that are reflected in the Financial Statements and all
inventory items that have been acquired since the Balance Sheet Date
consist of goods of such quality and
in such quantities as are usable or saleable in the ordinary course of
their business; and that since the Balance Sheet Date the Companies have
continued to replenish inventory in a normal and customary manner
consistent with prior and prudent practice.
Real Property. Seller represents and warrants that the Companies own
no fee, reversionary or remainder interests in any real property.
Real Estate Leased. Schedule 5.20 sets forth a list of all leases,
subleases or other agreements under which the Company is lessee or lessor
of any real property. The Company is the holder of the leasehold estates
purported to be granted by the instruments described on Schedule 5.20,
except as otherwise stated therein. Except as set forth on Schedule 5.20,
all such leases, subleases and other agreements are to the best of Seller's
knowledge (i) in good standing, valid and effective, (ii) grant the
leasehold estates they purport to grant free and clear of all mortgages,
liens, claims, charges, security interests, encumbrances or other
restrictions on the Companies' interests in the leases, subleases and other
agreements which would materially affect the use for which they are held by
the Companies (other than any unperfected landlord's lien); to the best of
Seller's knowledge there is not under any of such instruments any existing
or claimed default, event of default or event which with notice or lapse of
time or both would constitute an event of default which would materially
and adversely affect the assets, properties, business, operations or
financial condition of the Companies; the Seller has not received notice
that any structures, improvements, fixtures in real estate leased by or to
the Companies do not conform to any and all applicable state and local
laws, zoning and building ordinances and health and safety ordinances; no
notice from any governmental body has been served upon the Company claiming
any violation of any such law or ordinance, or requiring any substantial
work, repairs, construction, alterations or installation on or in
connection with such real estate, which has not been complied with or is
not being contested in good faith.
Software. Seller represents and warrants that the Companies have
developed certain proprietary computer software programs relating to the
Hospitality segment and to Seller's knowledge the Companies have the sole
and exclusive ownership of such proprietary programs and no proceeding is
pending or threatened in regard to the ownership or the Companies' rights
in said programs.
Banking Relationships. The Seller represents and warrants that
Schedule 5.22 sets forth (i) the name of each bank, trust company and stock
or other broker with which the Companies have an account, credit line or
safe deposit box or vault, or otherwise maintain relations, (ii) the names
of all persons authorized to draw thereon or to have access to any safe
deposit box or vault, (iii) the purpose of each such account, safe deposit
box or vault, and (iv) the names of all persons authorized by proxies,
powers of attorney or other like instrument to act on behalf of the
Companies in matters concerning any of its business or affairs. No such
proxies, powers of attorney or other like instruments are irrevocable.
Records. Seller represents and warrants that the respective books of
account and minute books of the Companies are complete and correct and
reflect all those transactions involving the Companies' business that
properly should have been set forth in those books.
Accounts Receivable. Seller represents and warrants that all of the
accounts receivable of the Companies reflected in the Financial Statements
and all of the accounts receivable that have arisen since the Balance Sheet
Date (except accounts receivable that have been collected since the Balance
Sheet Date) have arisen in the ordinary course of business for goods or
services delivered or rendered.
Accounts Payable. Seller represents and warrants that all of the
accounts payable of the Companies reflected in the Financial Statements and
all of the accounts payable that have arisen since the Balance Sheet Date
(except accounts payable that have been paid since the Balance Sheet Date)
have arisen in the ordinary course of business for goods or services
delivered or rendered.
Seller further represents and warrants that at Closing the account
payable to MCI as determined by invoice from MCI dated November 15, 1996
shall be paid through the last monthly invoice received on or before
Closing.
Purchase Commitments. Seller represents and warrants that to the best
of Seller's knowledge and except as set forth in Schedule 5.26, all
purchase commitments of the Companies arose in the ordinary course of
business.
Insurance Policies. Set forth at Schedule 5.27 are all of the
Insurance Policies of the Companies which policies shall be in full force
and effect as of the Closing date but all of which lapse by their terms at
midnight on the Closing Date.
Expenses and Brokers Commissions. Seller represents and warrants that
it knows of no commission, finder fee or other renumeration due to any
finder, broker, or the like employed by it in connection with this
Agreement.
Accurate Disclosure. The Seller represents and warrants that this
Agreement, including the Schedules annexed hereto, does not contain any
untrue statement of material fact.
Representations and Warranties of Buyer.
Authorization. This Agreement has been duly authorized, executed and
delivered by the Buyer, and the Buyer has full power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby and Buyer shall evidence this authority in form
reasonably satisfactory to Seller prior to Closing.
Organization. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and has
full power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted. At or prior to Closing
Buyer shall deliver to Seller a Certificate of Good Standing evidencing
Buyer's good standing in the state of Nevada.
Compliance with Laws and Instruments. Neither the execution and
delivery of this Agreement by Buyer nor the consummation of the
contemplated transactions will (i) violate any provisions of the Articles
of Incorporation or Bylaws of the Buyer; (ii) violate, conflict with or
result in the breach or termination of or constitute a default under the
terms of, any mortgage, lease, bond, indenture, agreement, franchise or
other instrument or obligation to which the Buyer is a party or by which
the Buyer may be bound or by which any of the Buyer's properties or assets
may be bound.
Consent. No consent of any other party and no consent, license,
approval or authorization of, or exemption by, or registration or
declaration with, any governmental authority, bureau or agency not
previously obtained, is required in connection with the execution,
delivery, validity or enforceability of this Agreement with respect to the
Buyer.
No Extraordinary Transactions. The Buyer shall not cause the Companies
to engage on the Closing Date in any transaction outside the ordinary
course of business, other than the transactions described herein.
Taxes. Buyer shall promptly refund to Seller any refund of taxes
attributable to any period prior to Closing whether said refund is made by
way of direct payment or credit.
Access. Buyer shall cause ComTel Computer, Corp. to provide to Seller
reasonable access to its books and records as may be required by Seller for
preparation of tax returns, tax audits, compliance with the terms of this
Agreement and other similar and reasonable purposes.
Expenses and Brokers Commissions. Buyer represents and warrants that
it knows of no commission, finder fee or other renumeration due to any
finder, broker, or the like employed by it in connection with this
Agreement.
Conditions to Buyer's Performance. The obligations of the Buyer at and
prior to Closing are subject to the satisfaction or waiver, in writing, at or
prior to Closing of each of the following conditions:
Representations and Warranties. All representations and warranties of
Seller and the Companies contained in this Agreement shall be true and
correct in all material respects as of the Closing Date as if such
representations and warranties were made as of the Closing Date; Seller and
the Companies shall have performed all agreements and covenants required by
this Agreement to be performed by them prior to or at the Closing Date; and
there shall have been no material adverse change in the financial
condition, results of operations, business, properties or assets of the
Companies. On the Closing Date, there shall be delivered to the Buyer a
certificate of the Seller and the Companies, dated the Closing Date, to the
foregoing effect substantially in the form as set forth at Schedule 7.1.
Court Orders. On the Closing Date, there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court or governmental body or authority, directing that the
transactions provided for herein or any of them not be consummated as
herein provided.
Schedules and Exhibits. On and prior to the date of Closing, the
Seller and Companies shall have furnished all Exhibits and Schedules to the
Buyer required to be furnished by Seller and Companies.
Opinion of Counsel. The Buyer shall have received the opinion of the
General Counsel of the Seller, dated as of the Closing Date, addressed to
the Buyer and in form and substance satisfactory to the Buyer to the effect
that:
The Companies are corporations duly organized, validly existing
and in good standing under the laws of the States of Nevada and
California, respectively, and have the corporate power to own their
property and conduct their business as now being conducted. Seller
shall deliver to Buyer a Certificate of Good Standing evidencing
Seller's good standing in the State of Illinois at or prior to
Closing;
Upon completion of the purchase of the Shares pursuant to this
Agreement, Buyer will acquire the Shares free and clear of any liens,
encumbrances or adverse claims;
This Agreement has been duly executed and delivered on behalf of
the Seller and the Companies, and constitutes a legal, valid and
binding obligation of each of the Selling Shareholders and the
Companies, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, or similar laws from time to time in effect which affect
creditors' rights generally, and by legal and equitable limitations on
the enforceability of specific remedies). At or prior to Closing
Seller shall deliver to Buyer a Secretary's Certificate evidencing
Seller's authority for this transaction;
Counsel has no knowledge of any actions, suits or proceedings
pending or threatened against or affecting the Company in any court or
before any arbitrator of any kind or before or by any governmental
body except as disclosed and provided for at Schedule 5.11;
In rendering such opinion, counsel may rely as to factual matters
on certificates of officers, directors or shareholders of the Company
and on certificates of governmental officers.
Resignations. The Seller shall provide the Buyer the written
resignations, effective as of the Closing Date, of all of the Officers and
Directors of the Companies.
Conditions to Seller's and Companies' Performance. The obligations of the
Seller at Closing are subject to the satisfaction or waiver, in writing, at or
prior to Closing of each of the following conditions:
Representations and Warranties. All representations and warranties of
Buyer contained in this Agreement shall be true and correct in all material
respects as of the Closing Date as if such representations and warranties
were made at and as of the Closing Date by the terms of this Agreement;
Buyer shall have performed all agreements and covenants required by this
Agreement to be performed by it prior to or at the Closing; and on the
Closing Date there shall have been delivered to the Seller a certificate of
the Buyer, dated the Closing Date, to the foregoing effect substantially in
the form as set forth at Schedule 8.1.
Court Orders. On the Closing Date there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court or governmental body or authority directing that the
transactions provided for herein or any of them not be consummated as
herein provided.
Opinion of Counsel. The Seller shall have received the opinion of
Xxxxxxxxx & Company P.C., counsel to the Buyer, dated the Closing Date,
addressed to the Seller and in form and substance satisfactory to the
Seller, to the effect that:
Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada and has the
corporate power to own its property and conduct its business as now
being conducted;
This Agreement has been duly authorized, executed and delivered
on behalf of Buyer, and constitutes a legal, valid and binding
obligation of Buyer, enforceable in accordance with its terms (except
as enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, or similar laws from time to time in effect which affect
creditors rights generally, and by legal and equitable limitations on
the enforceability of specific remedies);
The execution and delivery of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated
hereby, will not violate the Articles of Incorporation or Bylaws of
the Buyer or any law, regulation, judgment, order, injunction, decree
or award known to such counsel to be applicable to Buyer of any court,
arbitrator or governmental body;
No consent of any party and no consent, license, approval or
authorization of, or exemption by, or registration or declaration
with, any governmental authority, bureau or agency not previously
obtained and in effect on the Closing Date is required in connection
with the execution, delivery, validity or enforceability of this
Agreement or the consummation of the transactions contemplated hereby.
In rendering such opinion, counsel may rely as to factual matters
on certificates of officers or directors of the Buyer and on
certificate of government officers.
Schedules and Exhibits. On and prior to the date of Closing, the Buyer
shall have furnished all Exhibits and Schedules to the Seller required to
be furnished by Buyer.
Indemnification.
Terms of Indemnification. Seller shall indemnify the Buyer against any
and all damages, claims, loss, expenses (including, but not limited to,
reasonable attorneys' fees and disbursements) and liabilities resulting
from any misrepresentation, breach of warranty, or nonfulfillment or
failure to perform any material obligation on the part of the Seller under
this Agreement (collectively referred to hereinafter as the "Indemnified
Liabilities"). The Buyer agrees to indemnify the Seller against any and all
damages, claims, loss, expenses (including, but not limited to, reasonable
attorneys' fees and disbursements) and liabilities resulting from any
misrepresentation, breach of warranty, or nonfulfillment or failure to
perform any covenant or agreement on the part of the Buyer under this
Agreement. The party claiming indemnification hereunder is hereinafter
referred to as the "Indemnified
Party" and the party against whom such claims are asserted hereunder is
hereinafter referred to as the "Indemnifying Party".
Limits on Indemnification. No claim may be made against Seller for
indemnification under this Agreement unless and then only to the extent the
aggregate of all Indemnified Liabilities incurred by Buyer exceed $50,000.
This limitation shall not apply to any claim made pursuant to the breach of
any warranty or representation made at paragraphs 5.25.1 and 5.10. In no
event shall Seller's total liability for all claims asserted under this
Agreement exceed the sum of the payments actually received by Seller.
Adjustment of Liability. Any payment to be made by Seller to Buyer
pursuant to paragraph 9 hereof shall be reduced by any tax benefit accruing
to the Indemnified Party on account of any such indemnification payment and
by the amounts actually recovered by the Indemnified Party from its
insurance carriers, and any amount recovered by the Indemnified Party
subsequent to the payment by the Indemnifying Party hereunder with respect
to the same claim shall be remitted to the Indemnifying Party, except that
such remittance shall not exceed the amount of the indemnification payment
made by the Indemnifying Party. Buyer agrees after the Closing to maintain
insurance coverage currently maintained by Seller to the extent that such
policies provide coverage for Indemnified Liabilities.
Timing of Payment. Payment of any claim for indemnification by Buyer
or Seller which is finally determined by judgement, agreement or otherwise
prior to the payment of the Second Escrow Deposit shall be an adjustment to
the Second Escrow Deposit. Any claim not finally determined by judgement,
agreement or otherwise by such date shall not be an adjustment to the
Second Escrow Deposit and shall not be cause to delay or withhold such
payment.
Method of Asserting Claims. All claims for indemnification by any
Indemnified Party shall be asserted and resolved as follows:
In the event that any claims or demand for which an Indemnifying
Party would be liable to an Indemnified Party under this Agreement is
asserted against or sought to be collected from such Indemnified Party
by a third party, the Indemnified Party shall promptly notify in
writing the Indemnifying Party of such claim or demand, specifying the
nature of and specific basis for such claim or demand and the amount
or the estimated amount thereof to the extent then feasible (which
estimate shall not be conclusive of the final amount of such claim and
demand (the "Claim Notice"). The Indemnifying Party shall not be
obligated to indemnify the Indemnified Party with respect to any such
claim or demand if the Indemnified Party fails to notify the
Indemnifying Party thereof in accordance with the provisions of this
Agreement in reasonably sufficient time so that the Indemnifying
Party's ability to defend against the claim or demand is not
prejudiced. The Indemnifying Party shall have thirty (30) days from
the personal delivery or mailing of the Claim Notice (the "Notice
Period") to notify the Indemnified Party (i) whether or not the
Indemnifying Party disputes its liability to the Indemnified Party
hereunder with respect to such claim or demand and (ii) whether or not
the Indemnifying Party desires, at its sole cost and expense, to
defend the Indemnified Party against such claim or demand. In the
event that the Indemnifying Party notified the Indemnified Party
within the Notice Period that it
desires to defend the Indemnified Party against such claim or demand
and except as hereinafter provided, the Indemnifying Party shall have
the right to defend by all appropriate proceedings, and control the
settlement of any such claim or proceeding which proceedings shall be
settled or prosecuted by him to a final conclusion. If the Indemnified
Party desires to participate in, but not control, any such defense or
settlement it may do so at its sole cost and expense. If requested by
the Indemnifying Party, the Indemnified Party agrees to cooperate with
the Indemnifying Party and its counsel in contesting any claim or
demand which the Indemnifying Party elects to contest, including,
without limitation, by executing or causing to have executed any power
of attorney authorizing the Indemnifying Party to act on behalf of the
Indemnified Party or the Companies, or, if appropriate and related to
the claim in question, in making any counterclaim against the person
asserting the third-party claim or demand, or any cross-complaint
against any person. No claim may be settled without the consent of the
Indemnifying Party.
Seller and Buyer (i) agree that any suit, action or other legal
proceeding arising out of this Agreement may be brought only in the
United States District Court for Illinois, and (ii) consent to the
jurisdiction of any such court in any such suit, action or
proceedings; and thus waive any objection which such party may have to
the laying of venue of any such suit, action or proceedings in any
such court.
Seller and Buyer agree that this Agreement shall be construed in
accordance with, and governed by, the laws of the State of Illinois.
Survival of Representations, Warranties and Indemnification. The
representations and warranties of Seller and all other obligations of
Seller hereunder, shall survive the Closing and, except for breach of the
representations and warranties set forth at paragraph 5.1, shall expire on
the first anniversary of the Closing Date, and thereafter, except as
provided in the next succeeding sentence, no claim may be brought by the
Buyer arising under or in connection with this Agreement or any of the
transactions contemplated hereby, except for a breach by the Seller of its
obligations under paragraph 5.1. If written notice of a claim has been
given by the Buyer prior to the first anniversary of the Closing Date, then
the relevant representation, warranty or other obligation shall survive as
to such claim until the claim has been finally resolved. Notwithstanding
the foregoing and except for the representation and warranties made in
Section 5.10, in the event that, prior to the Closing, the Buyer has
knowledge that any representation or warranty made by the Seller is
incorrect as of the date hereof or will be incorrect as of the Closing, the
Buyer shall have as its sole remedy hereunder the option (i) if such
misrepresentation or breach of warranty is material, to terminate this
Agreement (on ten business days' notice during which period the other party
may cure such representation or breach of warranty) or (ii) to proceed with
the Closing and, upon the Closing, such party shall be conclusively deemed
to have waived all such claims hereunder relating to such misrepresentation
or breach of warranty.
Exclusive Remedy. From and after the Closing, Seller shall not be
liable or responsible in any manner whatsoever to Buyer, whether for
indemnification or otherwise, except as expressly provided in this Section
9, which provides the exclusive remedy and cause of action of the Buyer
with respect to any matter arising out of or in connection with this
Agreement or the transactions contemplated hereby.
Miscellaneous.
Delivery of Documents. Following the Closing, the Seller and the
Buyer each shall execute and deliver such documents, provide information
and take such other action, as shall be reasonably requested by the other
party hereto to carry out the transactions contemplated by this Agreement.
Notices. All notices or other communications required or permitted by
this Agreement shall be sufficiently given and deemed delivered when
posted if in writing and mailed by registered or certified mail, return
receipt requested, as follows:
If to the Seller, to:
Davel Communications Group, Inc.
0000 Xxxxxxx Xxxxx
Xxxxx, XX 00000
Attn: Mr. Xxxxx Xxxx
With a copy to:
Davel Communications Group, Inc.
000 X. Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxxxxxx, Xx.
If to the Buyer, to:
Comtel Computer Corp.
0000 Xxxx 00xx Xxx.
Xxxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
With a copy to:
Xxxxxxxxx & Company, P.C.
0000 Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxx
or to such other addresses as the parties may from time to time designate
in accordance with the procedure for Notice provided by this paragraph.
Assignment. This Agreement shall not be assigned by the Seller except
that it may be assigned by operation of law by Seller. Buyer may assign
this Agreement, without the consent of the Seller, to any corporation
controlling, controlled by or under common control with Buyer.
Amendment and Waiver. This Agreement shall not be amended, except
pursuant to an instrument executed by all of the parties hereto. Any
term or provision of this Agreement
may be waived pursuant to an instrument executed by the party entitled to
the benefit thereof.
Expenses. Each of the parties to this Agreement shall bear its own
expenses incurred in connection with the negotiation, preparation and
execution of this Agreement and the consummation of the transactions
contemplated hereby.
Severability. If any provision of this Agreement, or the application
of any such provision to any person or circumstance, shall be held invalid
by a court of competent jurisdiction, the remainder of this Agreement, or
the application of such provision to persons or circumstances other than
those as to which it is held invalid, shall not be affected thereby.
Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single instrument.
Entire Agreement. This Agreement sets forth the entire understanding
and agreement between the parties as to the matters covered herein and
supersedes any prior understanding, agreement or statement written or oral
of intent. No provision of this Agreement shall be construed to confer any
rights or remedies of any person other than the Seller or the Buyer.
Survival of Representations. The representations, warranties,
agreements and covenants given or made by the Seller and Buyer under this
Agreement shall, subject to the provisions of Section 11, survive the
Closing and any audit or investigation made by or on behalf of the
parties.
(S)338 Election. The Buyer covenants that it will not make any
election under (S)338 of the Internal Revenue code (or any similar
provision under State or local law) with respect to this transaction.
Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Time. Time is of the essence with respect to this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed and delivered as of
the date first written above.
BUYER:
SKYLINK TELECOOMUNICATIONS CORPORATION
______________________________________
Xxxxxxxx X. Xxxxx, President
THE COMPANIES
COMTEL COMPUTER CORP. CALIFORNIA COMTEL COMPUTER, INC.
___________________________ ________________________________
Xxxxxxxx X. Xxxxxxxxxx, Xx. Xxxxxxxx X. Xxxxxxxxxx, Xx.
Senior Vice President Senior Vice President
SELLING SHAREHOLDER
DAVEL COMMUNICATIONS GROUP, INC
_______________________________
Xxxxxxxx X. Xxxxxxxxxx, Xx.
Senior Vice President
