AGREEMENT FOR SALE AND PURCHASE OF ASSETS
DATE: AS OF MARCH 14, 1997
PARTIES: COMPUTER ASSISTED TECHNOLOGIES, INC.
a Wisconsin corporation ("Seller")
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
INTELLIPHONE, INC.
a Minnesota corporation ("Buyer")
0000 Xxxxxxx Xxxx.
Xx. Xxxxx Xxxx, Xxxxxxxxx 00000
RECITALS:
A. Seller operates a business primarily engaged in providing and
servicing public pay telephones in Minnesota and Wisconsin. Seller owns
equipment, site contract rights, leasehold interests, tools, inventories,
account receivables, operating accounts, prepaid insurance, advertising and
sales materials and miscellaneous assets used in connection with the operation
of its business.
B. Buyer desires to acquire site contract rights for not less than 586
pay telephones, including a minimum of 385 "Intellicall" brand pay telephones
("Intellicall Phones"), located in Minnesota and Wisconsin and all telephones
and related equipment located at the respective sites identified in Exhibit
1.1.1 hereto together with all computer boards, telephone enclosures, cash
contents of the pay telephones, line deposits, permits, contract rights and
intangibles related thereto including all good will and rights associated with
the potential continuation of the site contracts after the expiration of the
term of the site agreement contracts and Seller desires to sell all of such
assets to Buyer.
AGREEMENT:
SECTION 1. ASSETS PURCHASED.
1.1 ASSETS PURCHASED. Seller agrees to sell to Buyer, and Buyer agrees to
purchase from Seller, on the terms and conditions set forth in this Agreement,
the following assets ("Assets"):
1.1.1 All of the Seller's right, title and interest in the "Site
Agreements" and any modifications thereto described on Exhibit 1.1.1 attached
hereto and made a part hereof by reference,
together with all equipment located at the sites identified in the contracts,
including telephones, computer boards used in relation to the telephones,
telephone enclosures, the cash contents of any pay telephones at 11:59 p.m. upon
the date of closing, line deposits, contract rights identified therein and any
intangibles related thereto. Seller represents that there are not less than 586
pay telephones, including a minimum of 385 Intellicall Phones, with "Site
Agreements" which are being purchased by Buyer. In the event that at the
closing the number of pay telephones is less than 586 and/or the number of
Intellicall Phones is less than 385, then the Purchase Price set forth at
Section 3 will be reduced accordingly at the rate of $3,916 per pay telephone
(other than an Intellicall Phone) and $4,166 per Intellicall Phone. Buyer shall
have no obligation to purchase more than 586 installed telephones at closing,
but should it elect to do so, the Purchase Price shall be increased accordingly
at the rate of $3,916 per pay telephone (other than an Intellicall Phone) and
$4,166 per Intellicall Phone, and the aggregate amount of such increase shall be
added to the principal amount of the Buyer's convertible replacement promissory
note ("Convertible Note") described at Section 3.1.4.
1.1.2 All manuals, warranties, sales materials and telephone books at
the identified sites.
1.1.3 All inventories of Seller's equipment, computer systems, spare
parts, materials and supplies used by Seller in the ordinary course of Seller's
business to maintain, service, repair and replace the equipment located at the
site locations identified in the above paragraphs.
1.1.4 Seller's goodwill for pay telephone operations within Minnesota
and Wisconsin, and all files or other business records to handle accounts
identified above.
1.1.5 All warranties, contract rights, claims, licenses, prepaid
insurance, and renewal rights, rights to receive income or to continue
contracts, options, grants and all assets of Seller associated with the
equipment listed on Exhibit 1.1.1 of whatever kind, whether known or unknown
(except as specifically excluded), are included as part of this sale.
1.1.6 The service vehicle described by year, make, model, V.I.N., and
location at the time of closing on Exhibit 1.1.6 attached hereto and as made a
part hereof by reference, which shall be sold in "AS-IS" and "WHERE-IS"
condition.
1.1.7 The trade names "Computer Assisted Technologies" and "Rolcom
USA," as well as any associated logos, or servicemarks.
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1.1.8 Executed agreements providing for the installation of at least
ninety-eight (98) pay telephones (the "Uninstalled Phones"), as set forth on
Exhibit 1.1.8.
1.2 EXCLUDED ASSETS. Excluded from this sale and purchase are Seller's
accounts receivable, collected cash on hand, notes receivable, prepaid accounts,
and the following:
1.2.1 All of Seller's cash on hand, bank accounts and operational
accounts of the date of closing, except for the cash contents of all pay
telephones being purchased at 11:59 on the date of closing,
1.2.2 Any prepaid taxes, tax deposits and prepaid rent,
1.2.3 No licenses or permits required to own and/or operate the
equipment are being purchased by the Buyer. Buyer shall be solely responsible
for obtaining all necessary permits and licenses as may be required to own and
operate the telephone equipment, however Seller agrees to cooperate and to
execute any documents which may be necessary to effect the transfer or
assignment of any permits and licenses required by regulatory or government
agencies.
SECTION 2. LIABILITIES ASSUMED AND NOT ASSUMED
2.1 LIABILITIES ASSUMED BY BUYER.
2.1.1 CONTRACT OBLIGATIONS. Buyer shall accept the assignment and
assume responsibility for the obligations of Seller under the Site Agreements
identified in Section 1.1.1, and Buyer will make its best efforts to install the
Uninstalled Phones set forth on Exhibit 1.1.8 and obtain Seller's consent with
respect to the Uninstalled Phones which it will not install, if any.
2.2 LIABILITIES NOT ASSUMED BY BUYER.
2.2.1 CORPORATE OBLIGATIONS. Notwithstanding that Buyer is acquiring
the trade name "Computer Assisted Technologies", it is not assuming any
liabilities of Seller or "Computer Assisted Technologies" except for those
described at Section 2.1.1 above.
2.2.2 EMPLOYEES. Except for the agreement described at Section 5.1
below, Buyer shall have no responsibility to hire or pay any employee or
independent contractor of Seller any compensation, sales commissions, sick pay,
retirement or other compensation.
2.2.3 TRANSFER TAXES. Seller shall pay one-half of any transfer
taxes, including, but not limited to, excise taxes and sales taxes arising from
this sale (with Buyer paying the balance, if any).
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2.2.4 GENERAL LIMITS. Except as set forth herein, Buyer shall not be
liable for any indebtedness of Seller. Buyer assumes no liabilities except as
stated herein.
2.3 SELLER'S OBLIGATIONS.
2.3.1 INCOME TAXES. Seller shall pay any state, federal or local
income taxes of Seller after application of all loss carry forwards, credits,
deductions or other tax offsets available to Seller and shall be responsible for
the cost of preparation of said tax returns and for all accounting fees
associated with the preparation of said tax returns for all time periods prior
to the date of closing.
2.3.2 COMMISSIONS AND CONTRACT OBLIGATIONS PAYABLE. Seller shall
remain liable for and shall pay when due any and all obligations arising from
payments and/or commissions due to site providers under the "Pay Telephone
Agreements", "Customer Service Agreements" and "Site Agreements" and shall
further pay all telephone bills and the cost of long distance or other telephone
service charges calculated through the date of closing. Buyer shall have the
right but not the obligation to cure any of Seller's defaults under such
agreements and to set off against its obligations under the Convertible Note
described at Section 3.1.4 any amounts paid to so cure Seller's defaults.
SECTION 3. PURCHASE PRICE FOR ASSETS
3.1 The purchase price for the assets is Two Million Two Hundred Seventy
Thousand Three Hundred Dollars ($2,270,300) (the "Purchase Price"). Seller
accepts the consideration as full and sufficient consideration for the assets
identified above. The parties acknowledge that the Fifty Thousand Dollars
($50,000) paid by Buyer to Seller at the signing of the Letter of Intent between
them dated January 31, 1997, shall be applied to the Purchase Price. The
remainder of the Purchase Price shall be paid by Buyer to Seller at the closing
in the following manner:
3.1.1 Fifty Thousand Dollars ($50,000) in cash or other immediately
available funds; and
3.1.2 The assumption by Buyer of up to One Million One Hundred Twenty-
One Thousand Nine Hundred Dollars ($1,121,900) of Seller's debt to two equipment
leasing companies, Xxxxxxx Xxxxxx and TeleCapital; and
3.1.3 Six Hundred Ninety-Eight Thousand Four Hundred Dollars ($698,400)
to be paid by the delivery of 174,600 shares of Buyer's unregistered common
stock, based on a valuation of
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$4.00 per share. Seller shall be entitled to receive additional shares under
the following circumstances:
3.1.3(a) In the event Buyer completes an initial public offering at a
price per share of less than $8.00 (on a post-adjusted basis assuming a
two-for-one stock split prior to the anticipated initial public offering),
then, as soon as reasonably practical, Buyer shall deliver to Seller that
number of additional shares necessary to provide them with such total
number of shares resulting from the calculation in which 174,600 is divided
by the result of dividing the actual initial public offering price by
$8.00. For example, if the initial public offering price is $7.00, then
Buyer shall deliver to Seller an additional 24,943 shares (for a total of
199,543 shares) in accordance with the following calculations:
(i) $7.00 DIVIDED BY $8.00 = .875
(ii) 174,600 DIVIDED BY .875 = 199,543
(iii) 199,543 - 174,600 = 24,943
3.1.3(b) In the event Buyer does not complete an initial public
offering within one year of the date of this Agreement, then, as soon as
reasonably practical, Buyer shall deliver to Seller an additional 26,190
shares, representing an additional 15% of shares over the 174,600 delivered
under Section 3.1.3 above; PROVIDED, HOWEVER, that instead of delivering
such additional shares, Buyer may elect, in its sole discretion, to
purchase all of the shares then held by Seller at a price of $8.00 per
share for cash or other immediately available funds, and Seller hereby
agrees to sell all of its shares to Buyer upon such election. Buyer shall
make such election within 60 days after the first anniversary of this
Agreement; the closing of the purchase of shares by Buyer from Seller shall
take place no later than 60 days after such election.
3.1.4 Buyer will assume Seller's promissory note payable to Xxxx Xxxxx
in the principal amount of Three Hundred Fifty Thousand Dollars ($350,000),
cancel it and then issue to him Buyer's Convertible Note in the principal amount
of Three Hundred Fifty Thousand Dollars ($350,000) in substantially the form of
Exhibit 3.1.3 hereto. The Convertible Note shall bear interest at the rate of
eight and one-half percent (8 1/2%) per annum. Interest only will be payable
for six (6) months
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following the date of execution of said note, with the entire principal balance
and accrued interest due at the end of such six (6) month period. Xxxx Xxxxx
shall have the right to convert any or all of the principal or accrued interest
due under the Convertible Note on the basis of one (1) share of stock for each
$6.75 of principal and accrued interest due (on a post-adjusted basis assuming a
two-for-one stock split prior to the anticipated initial public offering),
subject to the same adjustments for an initial public offering price of less
than $8.00 as set forth in Section 3.1.3 above.
SECTION 4. ADJUSTMENTS
4.1 PERFORMANCE OF UNINSTALLED PHONES. The Purchase Price shall be
adjusted with respect to the performance of the Uninstalled Phones once they are
in operation in accordance with the formula set forth in Exhibit 4.1 hereto.
Such adjustment shall be applied to the principal amount of the Convertible Note
outstanding as of August 1, 1997; provided, however, if, as of such date, the
Convertible Note has been paid off or fully converted or is less than the amount
of the adjustment, then Seller shall receive or surrender, as the case may be,
one (1) share of stock for each $6.75 of the amount of the adjustment that is
not applied to the Convertible Note (on a post-adjusted basis assuming a two-
for-one stock split prior to the anticipated initial public offering), subject
to the same adjustments for an initial public offering price of less than $8.00
as set forth in Section 3.1.3 above. Buyer agrees to waive such an adjustment
to the Purchase Price if both of the following conditions are satisfied as of
August 1, 1997: (i) the site providers under this Agreement have in service at
least 685 payphones, and (ii) such payphones' average cash flow (as defined in
Exhibit 4.1 hereto) meets or exceeds the average cash flow of all Minnesota and
Wisconsin payphones.
4.2 OPERATION, INCOME AND EXPENSES REGARDING TELEPHONE EQUIPMENT. The
operation of telephone equipment identified on Exhibit 1.1.1 and related income
and expenses up to 11:59 p.m. on the closing date shall be for the account of
Seller, and thereafter for the account of Buyer. Seller shall pay all expenses
of the equipment through the date of closing, including but not limited to site
commissions, utilities, advertising, personal property taxes, rents and lease
payments, real property taxes, wages, and payroll taxes of Seller. Cash from
the telephones will be collected by Seller prior
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to 11:59 p.m. (local time in each location) on the date of closing and any cash
in the telephones thereafter shall belong to the Buyer.
4.3 OPERATION, INCOME AND EXPENSES REGARDING TELEPHONE EQUIPMENT. The
operation of telephone equipment identified on Exhibit 1.1.1 and related income
and expenses up to 11:59 p.m. on the closing date shall be for the account of
Seller, and thereafter for the account of Buyer. Seller
SECTION 5. OTHER AGREEMENTS
5.1 EMPLOYMENT AND NON-COMPETITION AGREEMENT (XXXXXX XXXXX). Following
closing, Buyer shall engage Xxxxxx Xxxxx in the initial position of Vice
President at an annual salary of Sixty Five Thousand ($65,000) all as set forth
in the form of Employment and Non-Competition Agreement attached hereto as
Exhibit 5.1(a) (the "Employment Agreement"). In further consideration of his
execution of the Employment Agreement, Xxxxxx Xxxxx will be granted an option to
purchase twenty thousand (20,000) shares of Buyer's common stock at an exercise
price of $6.75 per share. In addition, subject to his continuing employment by
Buyer or his termination of employment without cause (as set forth in the
Employment Agreement) , Xxxxxx Xxxxx shall also be entitled to exercise
successive stock options for ten thousand (10,000) shares (with the exercise
price being the fair market value of Seller's common stock on the effective date
of each exercise) in each of the three (3) years following the completion of his
first full year of employment by Buyer. Such grants of options shall be subject
to the terms and conditions of an Incentive Stock Option Agreement substantially
in the form of Exhibit 5.1(b).
5.2 NON-COMPETITION AGREEMENT (SELLER AND XXXX XXXXX). In further
consideration of the transactions contemplated by this Agreement, at closing
Seller and Xxxx Xxxxx shall enter into the form of Non-Competition Agreement
attached hereto as Exhibit 5.2. In consideration of the granting of the
covenant not-to-compete, the parties hereto agree to allocate $10,000 of the
aggregate Purchase Price to such covenant.
5.3 ASSIGNMENT OF CONTRACTS. Seller shall execute and deliver at closing
separate assignments of the Pay Telephone Agreements and Telephone Site
Agreements and after closing any additional documentation as may be requested by
Buyer it being the intention of the parties hereto that Seller shall cooperate
as is hereinafter necessary to perfect the Buyer's interest in all assets
purchased
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hereunder and that the obligations of Seller to execute assignments of
said contracts shall survive the closing.
SECTION 6. COLLECTION OF SELLER'S ACCOUNTS RECEIVABLE. Seller shall take
such action as is necessary to collect accounts receivable due to Seller on
account of telephone services provided prior to the date of closing. Buyer
shall cooperate with Seller as is necessary to provide Seller with information
from the files purchased by Buyer in order for Seller to collect the accounts
receivable. All commissions due to site owners prorated as 11:59 p.m. on the
date of closing shall be paid by Seller.
SECTION 7. SELLER'S REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Buyer as follows:
7.1 CORPORATE EXISTENCE. Seller represents that Computer Assisted
Technologies, Inc. is a Wisconsin corporation duly organized and validly
existing and in good standing and is authorized to transact business in the
states of Minnesota and Wisconsin. Seller has all requisite power and authority
to own, operate and/or lease the assets, as the case may be, and to carry on its
business as now being conducted.
7.2 AUTHORIZATION. The execution, delivery and performance of this
Agreement have been duly authorized and approved by the Board of Directors and
the requisite number of the shareholders of Seller, the lawful owner of all the
assets described herein, that no further approval for sale and transfer of the
assets to Buyer is required and this Agreement constitutes a valid and binding
Agreement of Seller in accordance with its terms.
7.3 FINANCIAL STATEMENTS. Seller has delivered to Buyer a list of site
revenues dated February 1, 1997. To the best of Seller's knowledge the site
revenues are in accordance with the books and records of Seller and are true,
correct, and complete.
7.4 TITLE TO ASSETS. Seller holds good and marketable title to the
Assets, free and clear of restrictions on or conditions to transfer or
assignment, and free and clear of liens, pledges, charges, security interests or
encumbrances of any kind or nature whatsoever except as described on Exhibit 7.4
attached hereto and made in part hereof by reference. Buyer is under no
obligations whatsoever to use OPTICOM operator service beyond August 31, 1997,
or any long distance provider previously
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used by Seller and Seller agrees to indemnify Buyer from any and all claims of
any person who may claim a right, title or interest in the assets transferred by
this Agreement. Seller specifically represents that it has made all payments
required prior to closing and taken such actions as may be necessary in order
for the transfer of all licenses for Intellicall I-STAR boards to be, and hereby
are transferred to Buyer.
7.5 BROKERS AND FINDERS. Seller has not employed a broker or finder in
connection with the transactions contemplated by this Agreement, or taken any
action that would give rise to a valid claim against Buyer or any party for a
brokerage commission, finder's fee, or other like payment.
7.6 TRANSFER NOT SUBJECT TO ENCUMBRANCES OR THIRD-PARTY APPROVAL. The
execution and delivery of this Agreement by Seller, and the consummation of the
contemplated transactions, will not result in the creation or imposition of any
valid lien, charge, or encumbrance on any of the Assets by any person, and will
not require the authorization, consent, or approval of any third party,
including any governmental subdivision, court or regulatory agency, except for
the consent required by the Minnesota and Wisconsin Public Utilities
Commissions.
7.7 LABOR AGREEMENTS AND DISPUTES. Seller is neither a party to, nor
otherwise subject to any collective bargaining or other agreement governing the
wages, hours, and terms of employment of Seller's employees. Seller is not
aware of any labor dispute or labor trouble involving employees of Seller, nor
has there been any such dispute or trouble during the three years preceding the
date of this Agreement
7.8 NONCANCELABLE CONTRACTS. At the time of closing, there will be no
material leases, employment contracts, contracts for services or maintenance, or
other similar contracts existing or relating to or connected with the operation
of Seller's business not cancelable within 30 days, except the telephone site
agreements.
7.9 LITIGATION. Seller has no knowledge of any claim, litigation,
proceeding, or investigation pending or threatened against Seller that might
result in any material adverse change in the business or condition of the Assets
being conveyed under this Agreement.
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7.10 NO MATERIAL ADVERSE CHANGE. Since January 1, 1997, there has not been
an adverse change in any of the assets or in the business in which the assets
are employed except as described on Exhibit 7.10 attached hereto and made a part
hereof by reference.
7.11 ACCURACY OF REPRESENTATIONS AND WARRANTIES. None of the
representations or warranties of Seller contain or will contain any untrue
statement of a material fact or omit or will omit or misstate a material fact
necessary in order to make statements in this Agreement not misleading. Seller
knows of no fact that has resulted, or that in the reasonable judgment of Seller
will result in a material change in the business, operations, or assets of
Seller that has not been set forth in this Agreement or otherwise disclosed to
Buyer.
7.12 SELLER'S OPERATION OF BUSINESS PRIOR TO CLOSING. Seller represents
that between January 1, 1997 and the closing date, Seller has: (a) operated the
business that in the usual and ordinary course and in substantial conformity
will all applicable laws, ordinances, regulation, rules, or orders, and has used
its best efforts to preserve its business organization and preserve the
continued operation of its business with its customers, suppliers, and others
having business relations with Seller and b) not assigned, sold, leased, or
otherwise transferred or disposed of any of the assets used in the performance
of its business, whether now owned or hereafter acquired, except in the normal
and ordinary course of business and in connection with its normal operation.
SECTION 8. COVENANTS OF SELLER
8.1 EMPLOYEE MATTERS
8.1.1 Seller has delivered to Buyer a list of the names and addresses
of all persons on the payroll of Seller dated February 1, 1997 having
information concerning the site agreements transferred to Buyer which list is
satisfactory to Buyer. Seller represents that Seller is unaware of any person
who has confidential information concerning the site agreements that would
assist that person in interfering with the contract rights being assigned.
8.2 CONDITIONS AND BEST EFFORTS. Seller will use its best efforts to
effectuate the transactions contemplated by this Agreement and to fulfill all
the conditions and obligations of Seller under this Agreement, and will do all
acts and things as may be required to carry out its obligations
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under this Agreement and to consummate and complete this Agreement. Seller
agrees to execute such additional documents as may be required to transfer all
assets identified by this Agreement.
SECTION 9. COVENANTS OF BUYER
9.1 CONDITIONS AND BEST EFFORTS. Buyer will use its best efforts to
effectuate the transactions contemplated by this Agreement and to fulfill all
the conditions of Buyer's obligations under this Agreement.
9.2 CONFIDENTIAL INFORMATION. If for any reason the sale of Assets is not
closed, Buyer will not disclose to third parties or use any confidential
information received from Seller in the course of investigating, negotiating,
and performing the transactions contemplated by this Agreement.
SECTION 10. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The obligation of
Buyer to purchase the Assets is subject to the fulfillment, before or at the
closing date, of each of the following conditions.
10.1 REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER. All
representations and warranties made in this Agreement by Seller shall be true as
of the closing date as fully as though such representations and warranties had
been made on and as of the closing date, and, as of the closing date, Seller
shall not have violated or failed to perform in accordance with any covenant
contained in this Agreement.
10.2 LICENSES AND PERMITS. Buyer shall have obtained or applied for all
licenses and permits from public authorities necessary to authorize the
ownership and operation of the business of Seller and the transaction shall have
been approved to by the Minnesota and Wisconsin Public Utilities Commissions.
10.3 CONDITIONS OF THE BUSINESS. There shall have been no material adverse
change in the manner of operation of Seller's business before the closing date.
10.4 NO SUITS OR ACTIONS. At the closing date no suit, action, or other
proceeding shall have been threatened or instituted to restrain, enjoin, or
otherwise prevent the consummation of this Agreement or the contemplated
transactions.
10.5 SITE AGREEMENTS. Seller has provided Buyer with satisfactory evidence
of the extension or renewal of any Site Agreements which otherwise might have
expired prior to closing.
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In no event shall Buyer be obligated to close hereunder if there are more than
50 telephones without valid, enforceable Site Agreements.
10.6 ENFORCEABLE AND ASSIGNABLE SITE AGREEMENTS. At closing Buyer is
provided with evidence that Seller is able to assign valid, enforceable and
current Site Agreements for at least 586 pay telephones and that the average
daily coin revenue per phone is $6.50 per phone and that site rents average
approximately 15% of site revenues.
SECTION 11. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
11.1 Except for the assumption of liabilities by Buyer required at closing
pursuant to Section 2.1.1 above, there are no other conditions precedent to the
obligations of the Seller herein.
SECTION 12. BUYER'S ACCEPTANCE
Buyer represents and acknowledges that it has entered into this Agreement
on the basis of its own examination, and opinion of the value of the business.
Buyer has not relied on any representations made by Seller other than those
specified in this Agreement. Buyer further acknowledges that Seller has made no
agreement or promise to repair or improve any of the leasehold improvements,
equipment, or other personal property being sold to Buyer under this Agreement,
and that Buyer takes all such property in the condition existing on the date of
this Agreement, "AS IS" and "WHERE IS".
SECTION 13. RISK OF LOSS
The risk of loss, damage, or destruction to any of the equipment,
inventory, or other personal property to be conveyed to Buyer under this
Agreement shall be borne by Seller to the time of closing. In the event of such
loss, damage, or destruction, Seller, to the extent reasonable, shall replace
the lost property or repair or cause to repair the damaged property to its
condition prior to the damage. If replacement, repairs, or restorations are not
completed prior to closing, then the Purchase Price shall be adjusted by an
amount agreed upon by Buyer and Seller that will be required to complete the
replacement, repair, or restoration following closing. If Buyer and Seller
are unable to agree, then Buyer, at its sole option and notwithstanding any
other provision of this Agreement, upon notice to Seller, may rescind this
Agreement and declare it to be of no further force and effect, in which event
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there shall be no closing of this Agreement and all the terms and provisions of
this Agreement shall be deemed null and void.
SECTION 14. INDEMNIFICATION AND SURVIVAL
14.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made in this Agreement shall survive the closing of this Agreement,
except that any party to whom a representation or warranty has been made in this
Agreement shall be deemed to have waived any misrepresentation or breach of
representation or warranty of which such party had knowledge prior to closing.
Any party learning of a misrepresentation or breach of representation or
warranty under this Agreement shall immediately give written notice thereof to
all other parties to this Agreement. The representations and warranties in this
Agreement shall terminate two (2) years from the closing date, and such
representations or warranties shall thereafter be without force or effect,
except any claim with respect to which notice has been given to the party to be
charged prior to such expiration date.
14.2 SELLER'S INDEMNIFICATION.
14.2.1 Seller agrees to indemnify and hold Buyer, its successors, and
assigns harmless from and against:
(1) Any and all claims, liabilities, and obligations of every kind
and description, contingent or otherwise, arising out of or related to the
operation of Seller's business assets prior to the close of business on the
closing date, except for claims, liabilities, and obligations of Seller
expressly assumed by Buyer under this Agreement or paid by insurance
maintained by Seller or Buyer.
(2) Any and all damage or deficiency resulting from any material
misrepresentation, on the part of Seller or its authorized representatives
under this Agreement.
(3) Any and all claims by shareholders of Seller arising from this
sale of the Assets.
(4) Any and all claims of creditors of Seller if said creditor
liabilities were not expressly assumed by Buyer under Section 2 of this
Agreement.
14.2.2 Seller's indemnity obligations under Section 14.2.1 shall be
subject to the following:
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(1) If any claim is asserted against Buyer that would give rise to a
claim by Buyer against Seller for indemnification under the provisions of
this paragraph, then Buyer shall promptly give written notice to Seller
concerning such claim and Seller shall, at no expense to Buyer, defend the
claim.
14.3 BUYER'S INDEMNIFICATION. Buyer agrees to defend, indemnify, and hold
harmless Seller from and against:
14.3.1 Any and all claims, liabilities, and obligations of every kind
and description arising out of or related to the operation of the business
following closing or arising out of Buyer's failure to perform obligations of
Seller assumed by Buyer pursuant to Section 2 of this Agreement.
14.3.2 Any and all damage or deficiency resulting from any material
misrepresentation, breach of warranty or covenant, or nonfulfillment of any
agreement on the part of Buyer under this Agreement.
14.3.3 Any and all claims arising from any occurrence subsequent to the
date of closing by owners under "Pay Telephone Agreements" and/or "Customer
Service Agreement & Letter of Agency" contracts, which agreements have been
assigned to Buyer.
SECTION 15. CLOSING
15.1 TIME AND PLACE. This Agreement shall be closed in Minneapolis,
Minnesota on the first business day following the date on which the Minnesota
and Wisconsin Public Utilities Commissions approve the transaction contemplated
hereby, unless the parties mutually agree in writing to a different date for
closing.
15.2 OBLIGATIONS OF SELLER AT THE CLOSING. At the closing and
coincidentally with the performance by Buyer of its obligations described
herein, Seller shall deliver to Buyer the following:
15.2.1 Xxxx of Sale in the form of Exhibit 15.2.1 hereto, assignments,
properly endorsed certificates of title, and other instruments of transfer, in
form and substance reasonably satisfactory to Buyer, necessary to transfer and
convey all of the Assets to Buyer as well as physical possession of the assets
identified herein, free and clear of all liens, pledges, charges, security
interests and encumbrances of any kind or nature whatsoever.
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15.2.2 Transfer of all licenses and permits to transacts business of the
Seller and transfer of the assumed business name of Seller.
15.2.3 Such other certificates and documents as may be contemplated by
the provisions of this Agreement, including a resolution of Seller's board of
directors and a resolution adopted by the requisite number of Seller's
shareholders authorizing this transaction.
15.3 OBLIGATIONS OF BUYER AT THE CLOSING. At the closing and
coincidentally with the performance by Seller of its obligations hereunder,
Buyer shall deliver to Seller the following:
15.3.1 A good and sufficient check or wire transfer in the amount
specified herein as consideration for this transfer along with the shares of
Buyer's stock as required under Section 3.1.3 and the Convertible Note required
under Section 3.1.4.
15.3.2 Such other certificates and documents as may be contemplated by
the provisions of this Agreement.
SECTION 16. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING
16.1 BOOKS AND RECORDS. This sale does not include the books and records
of Seller's business, except those records relating to the sellers accounts with
customers identified in the contracts being sold.
16.2 SELLER'S RIGHT TO PAY. In the event Buyer failed to make any payment
of taxes, assessments, or other charges that Buyer is required to pay to third
parties under this Agreement, Seller shall have the right, but not the
obligation, to pay the same. Buyer will reimburse Seller for any such payment
immediately upon Seller's demand. Any such payment by Seller shall not
constitute a waiver by Seller of any remedy available by reason of Buyer's
default for failure to make the payments.
16.3 BUYERS'S RIGHT TO PAY. In the event Seller failed to make any payment
of taxes, assessments or other charges that Seller is required to pay to third
parties (including but not limited to payments that are due to creditors of
Seller which in any way affect the use or ownership of the property transferred
hereunder) under this Agreement, Buyer shall have the right, but not the
obligation, to pay the same. Seller and/or Selling Shareholder's will reimburse
Buyer for any such payment immediately upon Buyer's demand. Further, Buyer may
withhold payments due under the Collateral Note in the amount paid by Buyer to
satisfy Seller's obligations. Any such payment by
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Buyer shall not constitute a waiver by Buyer of any remedy available by reason
of Seller's default for failure to make the payments.
SECTION 17. WISCONSIN BULK SALES LAW
Buyer waives compliance by Seller with the Wisconsin Bulk Transfer Act.
Except for those liabilities assumed by Buyer, as provided herein, in the event
any creditor of Seller claims the benefit of the Bulk Transfer Laws as against
Buyer or any of the assets being conveyed to Buyer under this Agreement, Seller
shall immediately pay or otherwise satisfy such claim or undertake its defense.
Seller shall indemnify and hold Buyer harmless from and against any and all
loss, expense, or damage resulting from the failure to comply with the Wisconsin
Bulk Transfer Law. If Seller fails to comply with the provisions of this
Section 17 and Buyer is required to pay any creditor of Seller in order to
protect the property purchased under this Agreement from claims or liens of
Seller's creditors, except those assumed by Buyer, then Buyer may withhold
payments due under the Convertible Note in the amount paid by Buyer to satisfy
Seller's obligations.
SECTION 18. SECURITIES LAWS.
This Agreement provides for the tender and delivery of Buyer's common stock
to Seller in partial consideration of the sale of the Assets and provides for
option(s) to purchase its common stock to be granted in connection with the
Employment Agreement between Buyer and Xxxxxx Xxxxx described at Section 5.1.
The securities referred to above have not been (nor prior to closing will they
be) registered with either the federal Securities and Exchange Commission or any
state securities agency and will be issued in reliance on the exemption from
registration contained in Section 4(2) of the Securities Act of 1933 (the
"Securities Act"). The shares, including shares underlying the common stock
purchase option(s) referred to above, may not be sold, pledged, hypothecated or
otherwise transferred unless they are registered under the Securities Act and
applicable state securities law or an exemption therefrom. Seller, Xxxxxx Xxxxx
and Xxxx Xxxxx, hereby acknowledge that the shares when issued will bear a
restrictive legend to the following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (THE "ACT") AND UPON REPRESENTATION OF THE HOLDER
HEREOF THAT
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SAID SHARES ARE BEING HELD FOR INVESTMENT AND
NOT WITH A VIEW TO THE SALE OR DISTRIBUTION THEREOF, AND NO
SALE, TRANSFER OR OTHER DISPOSITION MAY BE MADE EXCEPT IN
COMPLIANCE WITH THE PROVISIONS OF THE ACT.
Further, Seller, Xxxxxx Xxxxx and Xxxx Xxxxx acknowledge that Buyer can
give no assurance whatsoever that it will be able to complete an initial public
offering of its common stock at $8.00 per share or at any price, notwithstanding
references thereto at Section 3.1.3 above. Seller and Messrs. Elder represent
they may be required to hold any common stock received pursuant to the
transaction for an indefinite period of time and can resell or otherwise dispose
of such stock only in accordance with applicable federal and state securities
laws.
SECTION 19. MISCELLANEOUS PROVISIONS
19.1 PUBLIC DISCLOSURES. Neither Seller nor Buyer shall disclose the sale
of the assets in any press release or other public announcement without the
prior written consent of the other parties, which consent shall not be
unreasonably withheld.
19.2 EXPENSES. Whether or not the closing occurs, each party hereto shall
pay its own expenses in connection with his agreement.
19.3 NOTICES. Any notice, demand or communication required or permitted by
this Agreement shall be in writing and shall be delivered by hand or by U.S.
mail, first class certified mail, postage prepaid, return-receipt requested and
addressed to the parties at their respective addresses set forth at page one of
this Agreement. Either party may changes its address for notice purposes by
providing notice in accordance with his provision. Any notice, demand or other
communication shall be deemed given and effective as of the date of delivery by
hand, or upon the firth day following mailing.
19.4 HEADINGS. The headings and titles to the Sections and subparagraphs
of this Agreement are inserted for convenience only, and shall not be deemed to
be a part of the Agreement nor affect the construction or interpretation of any
provision of the Agreement.
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19.5 MODIFICATIONS AND WAIVERS. No modification or amendment of any
provision of this Agreement shall be effective for any purpose unless set forth
in a writing signed by the party of parties to be bound thereby. The waiver by
any party of any right or remedy under this Agreement on any one occasion shall
not be deemed a waiver of such right or remedy on any subsequent occasion.
19.6 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
19.7 BINDING EFFECT. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective heirs, personal representatives,
successors and assigns of the parties.
19.8 ENTIRE AGREEMENT. This Agreement and the exhibits to this Agreement
set forth the entire understanding of the parties with respect to the subject
matter hereof and supersedes all existing agreements between the parties with
respect to such subject matter, including, without limiting the foregoing, the
Letter of Intent between the parties hereto concerning the subject matter hereof
dated January 31, 1997.
19.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
19.10 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the state of Minnesota.
19.11 VENUE. This Agreement has been made entirely within the state of
Minnesota. This Agreement shall be governed by and construed in accordance with
the laws of the state of Minnesota. If any suit or action is filed by any party
to enforce this Agreement or otherwise with respect to the subject matter of
this Agreement, venue shall be in state courts in Minneapolis, Hennepin County,
Minnesota.
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DATED this 14 day of March, 1997.
SELLER:
------------------------------------------------------
Computer Assisted Technologies, Inc., a Wisconsin corporation
By /s/ Xxxxxx Xxxxx
------------------------------
Xxxxxx Xxxxx, President
BUYER:
------------------------------------------------------
Intelliphone, Inc., a Minnesota corporation
By /s/ Xxxx Xxxxxx
------------------------------
Xxxx Xxxxxx, Vice President and
Chief Financial Officer
AS TO SECTIONS 18 AND 19, THE UNDERSIGNED INDIVIDUALLY ACKNOWLEDGE THE
DISCLOSURES MADE THEREIN.
/s/ Xxxxxx Xxxxx /s/ Xxxx Xxxxx
------------------------------------ ------------------------------------
Xxxxxx Xxxxx Xxxx Xxxxx
