AGREEMENT OF SALE
AGREEMENT made this 19 day of October, 1995, between FLORIDA SOUND
ENGINEERING COMPANY, a Florida corporation, 0000 Xxxxxxx Xxxx Xxxxx,
Xxxxxxxxxxxx, Xxxxxxx, 00000 ("Seller") and AUDIO COMMUNICATIONS NETWORK, INC.,
0000 Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxx, 00000, a Florida corporation ("Buyer").
WITNESSETH
WHEREAS Seller desires to sell its assets specified herein to Buyer, for
both its background music business and its sound business, principally located
in Jacksonville and the State of Florida, and
WHEREAS Buyer desires to purchase those assets,
NOW THEREFORE the parties agree as follows:
1. Buyer will pay $6,000,000 cash for Seller's background music business
and sound business and all assets related to each except for cash and prepaids
as specified below.
2. Buyer's agreement to purchase Seller's background music business is
based upon guaranteed Monthly Xxxxxxxx of $125,000 at closing. This purchase
price may be adjusted as provided in Paragraph 6(b) hereof.
3. The purchase price includes:
(a) All subscriber contracts set forth on Exhibit A to be attached hereto
and any leased equipment on location at such subscriber sites.
(b) All office, studio and shop furniture, fixtures, equipment and
supplies and all data processing equipment, software
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and computer supplies, to be set forth on Exhibit B to be attached hereto.
(c) All vehicles owned and used by Seller in its business, except the
automobile used by Seller's president, to be set forth on Exhibit C and attached
hereto.
(d) All accounts receivable (for both the sound and background music
businesses), guaranteed to be not less than $360,000 at closing, to be listed on
Exhibit D to be attached hereto.
(e) All inventory and equipment of the business, guaranteed to be not less
than $340,000, to be listed as Exhibit E to be attached hereto.
(f) Seller's land and building in Jacksonville, estimated to be worth
$250,000, the legal description of which will be attached hereto as Exhibit F.
(Seller will pay all 1995 taxes attributable to this property.)
(g) Seller's vacant land in Ft. Xxxxx, having a book value of
approximately $19,000, the legal description of which will be attached hereto as
Exhibit G. (Seller will pay all 1995 taxes attributable to this property.)
(h) Seller's 8 Jacksonville Jaguar football tickets (4 club seats and 4
non-club seats), with rights to renew and assignment of the deposits previously
made by Seller for those seats.
(i) Seller's muzak franchise rights in counties in the States of Florida
and Georgia.
(j) All goodwill related to Seller's background and sound businesses.
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(k) All other assets listed on the balance sheet of Seller as of December
31, 1995, except cash and prepaids, as provided below, a copy of which shall
become a part of this Agreement as soon as it is prepared after closing.
The purchase price does not include cash in Seller's bank accounts, or
prepaid items (which prepaid items will be credited to Seller dollar-for-
dollar).
4. If Seller's account receivables and inventory and equipment are less
than $360,000 and $340,000, respectively, at closing, as determined by the
parties' CPA, the purchase price for the sound business will be reduced dollar-
for-dollar for the respective difference.
5.(a) The total purchase price for Seller's business includes all rights
in and to the name "Florida Sound Engineering Company," and any other corporate
names reserved or in use by Seller. The purchase price further includes the
right to keep all phone numbers and other listings presently used by Seller,
together with all trademarks or other trade dress rights presently owned or used
by Seller.
(b) The parties contemplate that Buyer shall form a corporation by the
name of "Florida Sound Engineering Company," with Seller's express consent, and
that Seller shall change its name at the same time. The parties further
contemplate that at the time of closing, this contract will be assigned to
Buyer's then wholly owned subsidiary, Florida Sound Engineering Company. Buyer
may assign the rights to any or all the assets covered by this Agreement to any
third party at or prior to closing. Provided, if
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such an assignment is made, the duties of Buyer under this Agreement shall be
assumed by the assignee.
6.(a) For purposes of this Agreement the term Monthly Xxxxxxxx shall be
defined as "recurring monthly revenue to include music service and equipment
lease xxxxxxxx and monthly allocation of advanced xxxxxxxx."
(b) If Seller's Monthly Xxxxxxxx as of closing are less than the
$125,000 guaranteed, the purchase price shall be reduced by 40 times the amount
under the guaranteed Monthly Xxxxxxxx. Provided, if monthly xxxxxxxx fall below
$120,000, either party will have the option of accepting the reduced purchase
price or cancelling this Agreement.
(c) The purchase price may also be reduced on a dollar-for-dollar basis,
and the guaranteed Monthly Xxxxxxxx shall be adjusted accordingly, should error
be found that is attributable to duplicate xxxxxxxx of customers.
(d) In computing the Monthly Xxxxxxxx for purposes of adjustment of the
purchase price, the parties agree that:
(1) Installations completed as of the date of closing shall be
included in the Monthly Xxxxxxxx.
(2) Signed, bona fide, five-year music service contracts, not
yet installed, shall be included in the Monthly Xxxxxxxx.
(3) Monthly Xxxxxxxx of subscribers who have given written or
oral notice of cancellation prior to the closing of this contract shall not be
included.
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(4) Customers whose accounts are not within 90 days of being
current as of December 31, 1995, shall not be included in the Monthly Xxxxxxxx
for purposes of determining the total adjusted purchase price.
7. Prior to closing Buyer shall have the right to inspect Seller's
relevant books and records of Seller's background business and its sound
business, with the inspection to take place at Seller's Jacksonville office.
8. The parties specifically understand that Buyer's obligation to close on
this contract and pay the purchase price as determined above is expressly
conditioned upon the following:
(a) Formal approval of this Agreement by Buyer's Board of Directors.
(b) Buyer obtaining an assignment in its favor of Seller's 956 Hz
contract, with written approval of such assignment, conditioned only upon
closing, to be attached hereto as Exhibit H.
(c) Buyer obtaining approval by Muzak for a 10 year franchise agreement,
commencing January 1, 1996, in a form substantially the same as currently
offered to Muzak franchisees.
(d) Evidence satisfactory to Buyer that Seller has paid off or will
otherwise discharge at closing its obligation to the Trustee of the Xxxx
Xxxxxxxx Trust, in the approximate amount of $600,000.
(e) Buyer obtaining adequate financing to close this Agreement.
(f) Completion of all Exhibits required by this Agreement.
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9. Seller agrees to continue to operate its business between the date of
this Agreement and the closing date in the normal course.
10. Seller agrees to continue at its current pace the conversion of its
Ocala accounts to DBS Equipment so that such conversion will be completed or
nearly so by the closing date of this Agreement.
11. Seller and its principal stockholder, Xxxxxx X. Xxxxxxxx, hereby agree
that they will not directly or indirectly participate in competition with Buyer
after the close of this contract with respect to a background music or sound
business for a period of 7 years in the Jacksonville metropolitan area and for a
period of 5 years within the State of Florida and southern Georgia.
12. Seller agrees to pay for all 1995 costs and expenses for services
performed and material received whether or not they were invoiced during 1995.
13. Buyer agrees to pay, as an addition to the purchase price, for jobs in
progress with respect to Seller's background music and its sound business, for
which Seller has not been paid, as set forth on Exhibit I to be attached hereto,
as determined by the parties' CPA. Payment for such jobs in progress shall
include the cost or actual value of the parts, materials, equipment used, plus
direct labor and normal labor burden, including payroll taxes, workmen's
compensation, social security, medicare, and the like.
14. Seller specifically agrees to indemnify Buyer for all warranty work
installed (whether or not completed) through December
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1995. If a claim for warranty sound business work is made in excess of $5,000,
Buyer shall notify Seller of the claim and Seller shall have the right to
contest and defend the claim or pay the reasonable cost of the claim, but in any
event, Seller will hold Buyer harmless from the claim. Seller's obligation to
indemnify Buyer for this warranty work shall include the cost or actual value of
the parts, materials and equipment used, plus direct labor and normal labor
burden, including payroll taxes, workmen's compensation, social security,
medicare and the like. This obligation for warranty work as to the music aspect
of the business shall be for all amounts in excess of $500 per occurrence.
15. Seller warrants that all assets included hereunder are or shall be as
of the date of closing free and clear of all liens, encumbrances or claims of
any kind.
16. Seller agrees to hold Buyer harmless from any and all liabilities
asserted against Buyer for a period of three years after closing which in any
way relate to Seller's obligations for the period prior to closing. Should any
such claims be made, Buyer shall give Seller and its principal stockholder
notice as soon as practicable to provide an opportunity to defend or otherwise
handle the claim.
17. The parties agree to execute such documents as reasonably needed to
close on this Agreement and to thereafter carry out the terms hereof. The
parties shall pay their own costs and expenses of closing this transaction,
except that the stamps on deed, title
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insurance, survey, and inspection fees on the two real estate assets shall be
split equally between the parties.
18. Seller and its principal stockholder, Xxxxxx X. Xxxxxxxx, acknowledge
that of necessity Buyer will look to Xxxxxxxx for the performance of any
continuing obligations of Seller incurred prior to closing, such as warranty
work reimbursement and indemnification of after-asserted claims; for his part,
Xxxxxxxx acknowledges and agrees to assume and perform Seller's obligations in
that connection. This Agreement shall run in favor of Buyer or its assignee and
shall not be enforceable by any third party claimant.
19. The parties hereto acknowledge that the purchase price is being paid
only for assets, not the corporate stock, and that Buyer in no way assumes any
of Seller's liabilities except as specifically provided for in this Agreement.
20. Buyer, with Seller's cooperation, shall prepare and send out the
Monthly Xxxxxxxx for January 1996 at the closing of this Agreement.
21. The formal closing date of this Agreement shall be January 2, 1996;
provided, however, that the parties shall endeavor to complete all obligations
hereunder and make provisions satisfactory to Seller for wire payment of the
purchase price on January 2, 1996.
22. Until otherwise changed, the mailing addresses of the parties for all
notices to be given hereunder shall be as follows:
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X. X. Xxxxxx, President COPIES TO: Xxxxxx Xxxx, Esq.
Audio communications Network, Inc. Allen, Dyer, Doppelt,
0000 Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxxx
Xxxxxxx, XX 00000 X.X. Xxx 0000
Xxxxxxx, Xxxxxxx 00000
Xxxxxx X. Xxxxxxxx COPIES TO: Xxxxxxx X. Xxxxxx, Xx.
11548 Mandarin Forest Drive Holland & Knight
Xxxxxxxxxxxx, XX 00000 00 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
23. This Agreement shall be specifically enforceable by Buyer or Seller, at
the option of either party, if such other party shall default. The parties
hereto agree that the provisions of this contract, including the categories of
property to be purchased hereunder, are detailed enough (to persons
knowledgeable in this business) to form the basis of a valid specific
performance action in the event that either Seller or Buyer refuses to close as
agreed herein.
24. The parties hereto agree that any and all disputes, specific
performance proceedings or the like arising out of or in any way involving the
subject matter of this Agreement, whether it be before or after closing, shall
be settled by arbitration before the American Arbitration Association in
accordance with its Commercial Rules, using a panel of three arbitrators.
25. This Agreement may be executed in counterparts each of which shall be
considered an original and that the Agreement shall
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become effective when such signed counterparts have been delivered to the other
party.
IN WITNESS WHEREOF the parties have executed this Agreement on the day and
year first above written.
FLORIDA SOUND ENGINEERING COMPANY
By: /s/ Xxxxxx X. Xxxxxxxx, President
---------------------------------------
Xxxxxx X. Xxxxxxxx, President
Xxxxxx X. Xxxxxxxx, President
--------------------------------------
Xxxxxx X. Xxxxxxxx, Individually
AUDIO COMMUNICATIONS NETWORK, INC.
By: /s/ X.X. Xxxxxx, President
----------------------------------------
X.X. Xxxxxx, President
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COMPANY VEHICLES
----------------
Vehicle # Make/Model Assignment Title# Tag # Mileage
--------- ---------- ---------- ------ ----- -------
1 93 Chevy Astro K. Tengue 48236110 INY39Y 71,474
2 89 Chevy Astro - 64195953 QWW76S 181,415
3 92 Chevy Astro X. Xxxxxxxxx 60407343 JGJ96X 147,000
4 91 Ford Van X. Xxxx 49603914 INY36Y 121,568
5 90 Chevy Astro X. Xxxxxx 48374374 QWW80B 111,791
6 92 Chevy Astro X. Xxxxx 62392566 SVD56D 112,799
7 93 Chevy Astro X. Xxxxxxx 63937184 JQP92Z 35,668
8 90 Ford Van X. Xxxxx 48406888 KUP58W 111,300
9 91 Ford Van X. Xxxxxxxx 49647385 INY34Y 122,909
10 Gnsvl 95 Chevy Astro K. Bonne BANK- RLM37W 28,011
10 Jax 88 Chevy Astro - 45928496 NVG25N 182,390
11 94 Chevy Astro X. Xxxxxxxx 65490659 PVV74H 52,893
90 Jeep Chero. X. Xxxx 48477076 QWW78S 68,554
89 Jeep Chero. X. Xxxx 47670034 SVD57D 78,239
90 Ford T-Bird X. XxXxxxx 49508786 SVD58D 76,344
95 Chevy S-10 X. Xxxxx 69148129 TQC27T 4,233
93 Ford Explor. X. Xxxxx 65491642 PVI56K 45,183
"EXHIBIT C"
