EXHIBIT 10.14
ASSET PURCHASE AGREEMENT
PAY TELEPHONE AMERICA, LTD.
&
TELALEASING ENTERPRISES, INC.
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made November 1, 1996, by and
between Pay Telephone America, Ltd., hereinafter referred to as "PTA" or
"Seller," and Telaleasing Enterprises, Inc., hereinafter referred to as
Telaleasing", "TEI", "Purchaser" or "Buyer".
W I T N E S S E T H,
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WHEREAS, the Seller owns and operates pay telephones and related service
facilities pursuant to agreements which are sometimes styled "Public
Communication Location Agreements," "Public Telephone Equipment and Service
Contracts," "Pay Telephone Agreements," "Coin Operated Telephone Equipment and
Service Contracts," "Contracts," "Pay Phone Location Agreements," "Royalty
Agreements," "Vending Agreements," "Leases," or other similar names and
hereinafter are called "Location Agreements"; and
WHEREAS, Pay Telephone America, Ltd. is a Mississippi Corporation; and
WHEREAS ▇▇▇▇▇▇▇▇ Industries Alabama, Inc., an Alabama Corporation, is the
sole shareholder of PTA. ▇▇▇▇▇▇▇▇ Industries Alabama, Inc. will guarantee
fully, absolutely and without recourse the performance and obligations of PTA
hereunder; and
WHEREAS ▇▇▇▇▇▇▇▇ Industries, Inc., a Georgia Corporation, is the sole
Shareholder of ▇▇▇▇▇▇▇▇ Industries Alabama, Inc. ▇▇▇▇▇▇▇▇ Industries, Inc. will
guaranty fully and absolutely the performance of ▇▇▇▇▇▇▇▇ Industries Alabama,
Inc. on its guaranty; and
WHEREAS, Purchaser is an Illinois corporation, solely owned by Davel
Communications Group, Inc. ("Davel"). Davel will guarantee fully, absolutely and
without recourse the performance and obligations of Purchaser hereunder; and
WHEREAS, Purchaser is in the business of owning and operating pay
telephones and providing associated services; and
WHEREAS, Purchaser and Seller entered into a Letter of Intent dated October
1, 1996 which Letter was assigned to Davel's wholly owned subsidiary,
Telaleasing Enterprises, Inc. Said Letter of Intent contemplates the transaction
memorialized by this Agreement. Any rights, duties and obligations of Davel,
Telaleasing or PTA created by, or arising out of, said Letter of Intent and any
amendments thereto are terminated and void as of the date of this Agreement.
This Agreement shall be the sole expression of the intent of the parties, their
rights, duties and obligations with respect to all matters arising out of the
transaction contemplated by the Letter of Intent or this Agreement; and
WHEREAS, Subject to the terms and conditions hereinafter set forth, the
Seller desires to sell, and the Purchaser desires to purchase all of Seller's
installed pay telephones consisting of units in Mississippi, Alabama, Tennessee,
Louisiana, Arkansas, Florida and Texas together with associated Location
Agreements, equipment, software, furniture, fixtures, computers, office
equipment, parts, contracts and inventory.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are acknowledged,
the parties agree as follows:
1. ASSETS TO BE PURCHASED.
Subject to the terms and conditions set forth herein, Purchaser agrees
to purchase and acquire from the Seller, and the Seller agrees to sell,
transfer, assign and convey to the Purchaser, free and clear of any and all
liens and encumbrances except for (i) obligations imposed by the Location
Agreements which shall be assumed by Purchaser, (ii) as set forth below in this
paragraph and (iii) liens and encumbrances arising out of any matter set forth
in Exhibit 3-h which liens and encumbrances shall be reserved for in the Escrow
referred to in (P) 2(b) hereof, or otherwise indemnified against under the
provisions of (P) 15(a) hereof) approximately 1,000 installed pay telephones
located in Mississippi, Alabama, Tennessee, Louisiana, Arkansas, Florida and
Texas ("Installed Pay Telephones"), associated enclosures, equipment, inventory,
software, computers, fixtures, furniture, tools, parts, supplies, associated
Location Agreements, and all assets and records (or true and exact copies
thereof) directly used in the operation of the Installed Pay Telephones. All of
said assets, including the Installed Pay Telephones, may be collectively
referred to herein as the "Assets" and are more fully described below. No
liabilities are assumed by the Purchaser except as explicitly described in this
Agreement. At Exhibit 1 is set forth a list of known, scheduled liens to which
the Assets may be subject, the parties shall obtain the release of said liens by
payment of Seller's funds distributed at Closing (as hereafter defined) or as
otherwise provided in this (P) 1. The Assets include, but are not limited to,
the following:
(a) Installed Pay Telephones, Equipment and Location Agreements. All
equipment, communications equipment, Pay Telephones, enclosures, masts, cables,
wiring, electrical wiring, conduit, slabs and related property used in
connection with, or located at, all of Seller's Installed Pay Telephones and
associated Location Agreements, a true and correct list of which is attached
hereto as Exhibit 1-a. All rights, duties, obligations and liabilities arising
out of the Location Agreements and attributable to periods prior to Closing
shall be retained by Seller and all such rights, duties, obligations and
liabilities attributable to periods after Closing shall be assumed by and be the
property and obligation of the Purchaser. A few Location Agreements may not be
memorialized by a writing but are nonetheless assigned by this Agreement. All
written Location Agreements are listed in Exhibit 1-a and the originals of said
Agreement are attached to Exhibit 1-a,
(b) Equipment and Inventory. As described in Exhibit 1-b,
(c) Business Records. As requested by Purchaser all original location
files and true and exact copies of all financial and business records pertaining
to the Assets or necessary for the operation of the Assets,
(d) Warranties and Licenses. All warranties and licenses and patents,
if any and to the extent transferable, relating to any of Assets including, but
not limited to, computer software licenses,
(e) Prepaid Expenses and Deposits. All coin in the Pay Telephones at
Closing for which Seller shall receive a credit at Closing, above and beyond the
purchase price, based on the mutually determined best estimate of the parties
and on polling and collection procedures satisfactory to the parties,
(f) Accounts Receivable. All accounts receivable attributable to
periods after Closing. Seller shall provide such notification to payers
regarding payment for amounts attributable to post closing periods as Purchaser
shall reasonably request. All accounts receivable attributable to periods prior
to closing shall remain
the property of Seller and are not conveyed hereby. Buyer shall promptly notify
Seller upon receipt of any such accounts and shall promptly pay any such
accounts so received to Seller,
(g) Revenues. All revenues attributable to periods subsequent to
Closing,
(h) Name. Buyer shall have the right to use the name "PTA" and the
name Pay Telephone America, Ltd. in its pay phone and telecommunications
operations; however, Seller makes no representation that it has any proprietary
or exclusive right to such name.
(i) Contractual Rights. All contractual rights to install pay
telephones not yet installed which contracts are summarized and attached hereto
at Exhibit 1(i).
2. CONSIDERATION.
(a) Purchase Price. As consideration for the transfer and assignment
of the Assets, Purchaser shall pay a total purchase price of $3,500,000.
(b) Payment at Closing. $533,000 of the purchase price shall be paid
at Closing into escrow ("Escrow") and held and paid as set forth at (P) 2(c),
(P) 15(a) and (P) 18. The escrowed amount is held as security against, and is
subject to deduction for, Sellers failure to perform its representations,
warranties and covenants herein including but not limited to payment by Seller
of those items specified in paragraphs 2(c), 3(a), 3(b), 3(c), 3(g), 3(h), 3(i),
3(l), 3(m), 3(n), 3(o), 3(q), 6(b), 6(c), 6(e), 11, 12, 14 and 15 of this
Agreement. The balance of the purchase price shall be paid as directed by Seller
at Closing.
(c) Kenner & Ridgeland Contracts Scheduled at Contract #015 in Exhibit
1-a are twenty-two (22) Installed Pay Telephones under contract with ▇▇ ▇▇▇▇▇▇
Associates ("Kenner Contract") and at Contract #033 in Exhibit 1-a are
scheduled sixteen (16) Installed Pay Telephones under contract with the
Ridgeland Associates ("Ridgeland Contract") both the Kenner Contract and the
Ridgeland Contract require written consent by the Business Owner for the sale
and assignment to Davel. In all events the equipment installed pursuant to the
Kenner and Ridgeland Contracts shall remain the property of Buyer; however, it
is the obligation of Seller to obtain such written consents which consents have
not been obtained prior to Closing, therefore:
(i) Upon delivery to Buyer by Seller of written consent,
substantially in the form as set forth at Exhibit 2-c-i ("Kenner
Consent"), for the transfer of the Kenner Contract, the parties shall
immediately direct the Escrow Agent (as defined below) to release the
sum of $61,600 to Seller, less any amounts previously paid for the
Kenner contract pursuant to (P) 2(c)(ii). Upon delivery to Buyer by
Seller of written consent, substantially in the form as set forth at
Exhibit 2-c-ii ("Ridgeland Consent"), for the transfer of the
Ridgeland Contract, the parties shall immediately direct the Escrow
Agent to release the sum of $44,800 less any amounts previously paid
for the Ridgeland contract pursuant to (P) 2(c)(ii) to Seller.
(ii) Until such time as the Kenner Consent is provided to Buyer,
Buyer shall upon the request of Seller consent to the release from
Escrow of the sum of $63.00 per month per phone for each month during
which a phone is installed and Buyer has received the benefits of the
Kenner Contract, or substantially similar benefits, for the applicable
phone. In no event shall the amount released for each installed phone
pursuant to the Kenner Contract exceed $2,800 for such phone. Until
such time as the
Ridgeland Consent is provided to Buyer, Buyer shall upon the request
of Seller consent to the release from Escrow of the sum of $63.00 per
month per phone for each month during which a phone is installed and
Buyer has received the benefits of the Ridgeland Contract, or
substantially similar benefits, for the applicable phone. In no event
shall the amount released for each installed phone pursuant to the
Ridgeland Contract exceed $2,800 for such phone.
(iii) To the extent Pay Telephones installed pursuant to the
Ridgeland and Kenner Contracts are required to be removed or to the
extent it has been finally determined by the lapse of time or
otherwise that Buyer is not entitled to Escrow Funds pursuant to the
terms of this paragraph (P) 2-c, Seller shall consent to the release
of such funds to Buyer. Further, should the Kenner or Ridgeland
Contracts be renewed on substantially different terms, the parties
will agree to reasonable adjustments respecting distributions of
Escrow funds consistent with the terms and the provisions of this
paragraph, (P) 2-c.
(d) Price Allocation. The purchase price shall be allocated among
the assets as required by applicable law and regulation and the parties agree
that after Closing they shall agree to and file an Asset Acquisition Statement
prepared pursuant to I.R.C. (S)1060 on IRS Form 8594 consistent with said
allocation.
3. REPRESENTATIONS AND WARRANTIES.
Seller's Representations and Warranties
The Seller represents and warrants to the Purchaser that the following
are true and correct as of the date hereof, and will be true and correct on the
Closing Date (as hereafter defined) except as Seller may notify Purchaser prior
to Closing in a signed writing. Any such notification prior to Closing which
modifies any of the following representations and warranties shall, at the sole
option of Purchaser, result in termination of this Agreement without any
liability for such termination to Seller:
(a) Taxes. No claim or liability is pending or has been assessed or
asserted, or has been threatened against the Seller in connection with any taxes
which are, or may become, a lien against the Assets.
(b) Financial Information. The Seller has furnished to Buyer detailed,
historical financial information which is accurate in all material respects. To
the best of Seller's knowledge no fact or condition exists, or is contemplated
or threatened, which would have a material adverse effect on the business of
Seller or the Assets.
(c) No Finders or Brokers. No agent, broker or other person acting
pursuant to the Seller's authority is entitled to make any claim against the
Purchaser or the Seller for any commission or finder's fee in connection with
the transactions contemplated by this Agreement.
(d) Approval of Government Agencies. To the best knowledge and belief
of Seller no approval of any governmental or administrative agency or authority
is required as a condition to the execution and delivery of this Agreement by
the Seller or its consummation of the transactions contemplated hereby.
(e) Approval of Third Parties. Except as set forth at Exhibit 3-e,
there is no unobtained approval of any third party, except pursuant to release
of liens, required as a condition to the execution and delivery of this
Agreement by the Seller or the consummation of the transactions contemplated
hereby. The
obligation for the receipt of all such approvals shall rest solely with Seller
and is a condition precedent to Closing and payment.
(f) No Prohibition Against Purchaser. The Seller is not a party to,
or otherwise subject to, any agreement, indenture, instrument, lease, judgment
or any other decree or any other regulation or demand of any government, bureau,
board or agency which would prohibit the consummation of the transaction
contemplated by his Agreement or would otherwise be breached or impaired by such
consummation.
(g) Title to Assets. Except as set forth at (P) 1 and Exhibit 1 the
Seller is the owner of all the Assets and will convey the Assets to the
Purchaser free and clear of all mortgages, pledges, liens (including liens for
taxes due and payable), encumbrances, charges, claims, title retention
agreements or other security interests or arrangements except as specifically
provided herein. Purchaser shall assume no responsibility for any liability,
claim or obligation of Seller arising prior to the date of Closing and otherwise
only as provided in this Agreement.
(h) Litigation. Except as set forth at Exhibit 3-h, Seller has
operated the Assets in material compliance with all applicable laws, rules and
regulations except as may be immaterial to this transaction. There are no
actions, lawsuits or proceedings pending or threatened against the Seller in law
or in equity or before any governmental agency, that if determined adversely to
the Seller would materially affect the Assets being sold hereunder or that would
bring into question the validity of this Agreement or any action taken or to be
taken in accordance with or in connection with this Agreement.
(i) Contractual Interests. The Location Agreements are in full force
and effect except for the Kenner and Ridgeland Contracts. To the best of
Seller's knowledge there are no existing defaults under these agreements on the
part of Seller, which are, individually or in the aggregate, material to the
operation of the Assets. All available originals, and where none is available an
exact copy, if available, of each Location Agreement as scheduled at Exhibit
1-a and associated documents have been furnished to the Purchaser. The Seller is
not a party to any other material contract, agreement or understanding (whether
oral or written) relating to the Assets or Location Agreements.
(j) Fixed Assets and Inventory. The Assets conveyed by this Agreement
are conveyed in an "as is" condition and no warranty as to condition or fitness
is made except that Seller warrants that all Installed Pay Telephones are
operational (except to the extent pending, filed applications for lines have not
been approved) as of Closing and that it has no knowledge of any condition or
state of the Assets which would have a material adverse effect on the Assets,
taken as a whole.
(k) Employment Agreements. Seller has no employment or consulting
contracts relating to the Assets which will cause any lien to attach or charge
to be imposed on or against the Assets.
(l) Location Agreements. Seller warrants that as of the execution of
this Agreement, it has no knowledge of any claims existing or contemplated
against Seller whatsoever by the parties to the Location Agreements.
(m) Payment of All Taxes. The Seller has paid, or will pay as they
become due, all sales, excise, use, income or other taxes or similar charges due
and payable or to become due and payable by Seller for all periods prior to
Closing, the non-payment of which may subject Purchaser to liability, jointly or
severally, in whole or in part for such amounts. Notwithstanding anything to the
contrary contained in this Agreement, Seller shall be responsible and liable for
all taxes relating to the Assets or their use on or before the Closing and
Purchaser shall be responsible and liable for all taxes relating to the Assets
and their use after Closing. After the Closing, each party shall cooperate with
the other in dealing with any taxing authority with respect to the business
conducted and the Assets. Purchaser may, at its sole discretion if Seller has
failed to pay such taxes or charges within 10 days of Seller's receipt of
written notice, pay said taxes or charges and (i) give prompt notice to Seller
for reimbursement, such reimbursement to be made within three (3) business days;
or (ii) pay such taxes or charges and deduct same as a credit against the
balance of the purchase price or any other consideration due to
Seller. Buyer shall not pay any such taxes which are the subject of dispute
between Seller and the applicable taxing authority provided Seller gives Buyer
written notice of such dispute and provided that such non-payment does not
disrupt or interfere with Buyer's continued use or revenues from the purchased
assets. This provision does not relieve Seller from its obligation to pay such
charges or taxes if Purchaser does not avail itself of the foregoing remedies.
(n) Noncancelability of Location Agreements. The Location Agreements
are not terminable due to the execution of this Agreement or the performance of
the terms hereof.
(o) Payment of All Commissions. The Seller has paid, or will pay, on
or prior to the Closing Date, all commissions due from Seller or attributable to
periods prior to Closing under all Location Agreements. Alternatively, the
Seller shall pay such commissions as they become due after the Closing for the
period before the Closing. If the Seller fails to pay any such commissions
arising for periods before the Closing, the Purchaser may pay any such
commissions at its sole discretion if Seller has failed to pay such commissions
within 10 days of Seller's receipt of written notice, pay said commissions and
(i) give prompt notice to Seller for reimbursement, such reimbursement to be
made within five (5) business days; or (ii) pay such commissions and deduct same
as a credit against the balance of the purchase price or any other consideration
due to Seller. Buyer shall not pay any such commissions which are the subject of
dispute between Seller and the applicable location provided Seller gives Buyer
written notice of such dispute and provided that such non-payment does not
disrupt or interfere with Buyer's continued use or revenues from the purchased
assets. This provision does not relieve Seller from its obligation to pay such
commissions if Purchaser does not avail itself of the foregoing remedies.
(p) Installed Pay Telephone Keys. The Seller has delivered to the
Purchaser, on or prior to the Closing Date, all keys to the Installed Pay
Telephones, including keys to the upper housing and lower housing, and there are
no other keys or copies thereof held by any other parties, including employees
of Seller to the best of Seller's knowledge and belief.
(q) Payment of Telephone Charges. The Seller has paid, or will pay,
on the later of the Closing date or when billed by the local exchange carrier,
all telephone bills and charges due from the Seller to the local exchange
carrier, any interexchange carriers or to any other entity or party for services
provided for all periods prior to Closing and attributable to the Assets.
Alternatively, the Purchaser may pay any such bills and charges at its sole
discretion if Seller has failed to pay such bills and charges within 10 days of
Seller's receipt of written notice, pay said bills and charges and (i) give
prompt notice to Seller for reimbursement, such reimbursement to be made within
three (3) business days; or (ii) pay such bills and deduct same as a credit
against the balance of the purchase price or any other consideration due to
Seller. Buyer shall not pay any such bills or charges which are the subject of
dispute between Seller and the applicable creditor authority provided Seller
gives Buyer written notice of such dispute and provided that such non-payment
does not disrupt or interfere with Buyer's continued use or revenues from the
purchased assets. This provision does not relieve Seller from its obligation to
pay such bills or charges if Purchaser does not avail itself of the foregoing
remedies.
(r) Corporate Standing. Pay Telephone America, Ltd. is a corporation
duly organized and validly existing in good standing under the laws of
Mississippi with full power and authority to own its properties and conduct its
business as conducted. Seller shall provide a Certificate of Good Standing from
the State of Mississippi as of a recent date reasonably satisfactory to Buyer.
(s) Corporate Authority. This Agreement and the transactions
contemplated hereby have been duly and validly authorized and, at Closing, good
title to the Assets will be vested in the Seller and transferred to the
Purchaser free and clear of any claims or encumbrances (except as described at
(P) 1 and Exhibit 1) above or created by Purchaser or obligations of Purchaser.
This Agreement shall, when executed, be a valid and binding obligation of Seller
and its Guarantor. Seller shall provide Purchaser at or prior to Closing with
Certified Resolutions and a Secretary's Certificate in form reasonably
satisfactory to Buyer as evidence of authority for the transaction memorialized
by this agreement.
Purchaser's Representations and Warranties
The Purchaser represents and warrants to the Seller that the following are
true and correct as of the date hereof, and will be true and correct on the
Closing Date except as Purchaser may notify Seller prior to Closing in a signed
writing. Any such notification prior to Closing which modifies any of the
following representations and warranties shall, at the sole option of Seller,
result in termination of this Agreement without any liability for such
termination to Purchaser:
(t) No Finders or Brokers. No agent, broker or other person acting
pursuant to the Purchaser's authority is entitled to make any claim against the
Seller for any commission or finder's fee in connection with the transactions
contemplated by this Agreement.
(u) Approval of Government Agencies. No approval of any governmental
or administrative agency or authority is required as a condition to the
execution and delivery of this Agreement by the Purchaser or its consummation of
the transactions contemplated hereby.
(v) Approval of Third Parties. No approval of any third party is
required as a condition to the execution and delivery of this Agreement by the
Purchaser or its consummation of the transactions contemplated hereby. The
obligation for the receipt of any such approvals shall rest solely with Seller
and is a condition precedent to Closing and payment.
(w) No Prohibition Against Purchaser. The Purchaser is not a party
to, or otherwise subject to, any agreement, indenture, instrument, lease,
judgment or any other decree or any other regulation or demand of any
government, bureau, board or agency which would prohibit the consummation of the
transactions contemplated by his Agreement or would otherwise be breached or
impaired by such consummation.
(x) Corporate Standing. Telaleasing Enterprises, Inc. is a
corporation duly organized and validly existing in good standing under the laws
of the State of Illinois with full power and authority to own its properties and
conduct its business as conducted.
4. ACCESS TO RECORDS/VERIFICATION OF ASSETS.
Prior to Closing Seller will permit representatives of Purchaser
reasonable access to all the property, books, contracts, documents, records,
reports, and data bases of Seller relating to the Assets and will furnish such
information concerning same as Purchaser or its agents may reasonably request.
Purchaser and Seller agree that the basis for the establishment of the purchase
price is the financial statements and accounting information previously provided
and the number of Installed Pay Telephones.
5. DUE DILIGENCE.
This Agreement shall be binding upon the parties effective as of the
date of execution subject to verification, by the Purchaser, from information,
records, documents and other items provided by the Seller sufficient to verify
the factual basis for the warranties and representations made to it by the
Seller herein.
6. TRANSITION MATTERS.
(a) Implementation of Change With Owners. After Closing Seller shall
fully cooperate with Purchaser, but only as specifically requested from time to
time, in advising parties to the Location Agreements that the business of Seller
is under new management as of the date of Closing and to advise them as to the
manner in which to place requests for service in the future. Such cooperation
shall be limited to that reasonable in the circumstances. If Seller believes
that any such activity is unreasonable, Seller may request compensation as a
condition of performance or refuse to perform such activity.
(b) Non-Coin Long Distance. Seller is entitled to receive
compensation for long distance traffic from 0+ and 0- traffic from Operator
Service Providers. All such commissions, payments or other monies
due and owing Seller attributable to periods prior to Closing shall be the
property of Seller and shall be properly paid to Seller. This and any other
property of Seller which may come into Purchaser's possession shall be promptly
delivered within five (5) days by Purchaser to Seller. All such commissions,
payments or other monies due and owing Seller attributable to periods after
Closing shall be the property of Purchaser and shall be properly payable to
Purchaser. This and any other property of Purchaser which may come into Seller's
possession shall be promptly delivered within five (5) days by Seller to
Purchaser. After Closing Seller shall provide such notification to payors
regarding payment for amounts attributable to post closing periods as Purchaser
shall reasonably request. Seller agrees to assist as required in the
implementation of any change of Long Distance Provider requested by Purchaser
after Closing Date subject to compliance with applicable regulations.
(c) Coin. The parties have polled the phones prior to the date hereof
and based on the mutually determined best estimate of the parties Buyer hereby
agrees to pay Seller $47,000.00 for all coin in the phones at Closing in
addition to the purchase price. Seller shall not accelerate or delay removal of
coin from the Pay Telephones in anticipation of Closing so as to distort the
estimate of the parties or the amount of coin remaining in the phones at
Closing. Buyer is hereafter entitled to remove and retain all coin in the phones
at Closing without further accounting to Seller for such coin.
(d) Local Lines. After Closing Seller will cooperate in the transfer
of local telephone company lines and services to Purchaser, as required.
Purchaser shall use its reasonable best efforts to proceed promptly to effect a
transfer of service to the local exchange carrier.
(e) Records and Rate Files. Seller shall reasonably cooperate with
Purchaser in making available all rate files, databases and similar information
prior to Closing to facilitate the transfer of the Installed Pay Telephones to
Buyer at Closing. Seller will cooperate in providing such records in a format
and media convenient to Buyer.
(f) Public Utility Commissions. Seller shall take reasonable action
to cooperate with Buyer in obtaining the approval of the Public Utility
Commissions in all applicable states for the operation of the Installed Pay
Telephones. Such cooperation shall include, but not be limited to, Buyer's use
of Seller's authority, if any, pending approval of Buyer's application for COCOT
authority, which shall be promptly filed and prosecuted by Buyer.
7. CLOSING.
The transactions contemplated by this Agreement shall be consummated
on or before November 1, 1996. Said date shall be known herein as "the Closing
Date" or the "Closing." The Seller and the Purchaser shall take the following
actions on the Closing Date:
(a) The Seller shall deliver to the Purchaser the following fully
executed documents as a condition precedent to payment:
(i) A ▇▇▇▇ of Sale substantially in the form as set forth at
Exhibit 7-a-i transferring ownership of the Assets except for those
items conveyed pursuant to (P) 7(a)(ii).
(ii) An Assignment and Assumption of the Location Agreements
substantially in the form as set forth at Exhibit 7-a-ii;
(iii) All existing, available originally executed Location
Agreements;
(iv) Such other documents as may be reasonably required to
consummate and evidence the transactions and transfers contemplated by
this Agreement as may be requested by Buyer.
(b) The Purchaser shall pay the sums provided to Seller and the
Escrow agent as set forth and in the manner provided by (P)2.
(c) Transfer of Assets. On or prior to Closing Seller shall deliver
all of the Assets to Purchaser. Seller shall deliver all keys (and any copies
thereof) to all Installed Pay Telephones (both upper housing and lower housing
keys).
(d) Place of Closing. All transactions contemplated herein shall be
consummated at the office of Seller in Jackson, Mississippi or at such other
places the parties may mutually determine in writing.
(e) Exhibits. Any Exhibits not provided at the time of execution of
this Agreement shall be provided at or prior to Closing.
8. CONTINUING RELATIONSHIPS.
The Seller agrees to use its reasonable efforts for a period not to
exceed 180 days from closing to assure an orderly transition and favorable
business relationship between the Purchaser and Seller's existing phone
customers and suppliers. The Seller shall not, from and after the Closing Date,
solicit orders from such customers. In addition, the Seller shall, from and
after such time, direct to the Purchaser all inquiries from such customers and
other persons regarding the business of Seller. The Seller shall, from and
after the Closing Date, maintain the absolute confidentiality of all matters
relating to the Assets and business for three (3) years following the Closing
Date. Except for information which Seller has made publicly available or is
otherwise in the public domain, Purchaser shall not use or disclose any
information which Purchaser may have acquired concerning the Seller, or the
business practices of Seller, that are not directly related to the Assets.
Without limiting the foregoing and except for information which Seller has made
publicly available or is otherwise in the public domain, Purchaser shall not use
or divulge to any third person any financial information concerning the Seller,
including, but not limited to, the Financial Statements (except for financial
information directly related to the Installed Pay Telephones). None of the
foregoing restrictions on disclosure by Seller or Purchaser shall apply to
disclosures mandated by a court, taxing authority or other governmental entity
with authority to require such disclosure.
Except for passive investment as less than a 10% shareholder in any
publicly traded company, neither Seller nor Seller's sole shareholder, ▇▇▇▇▇▇▇▇
Industries Alabama, Inc., shall for a period of sixty (60) months from the date
of Closing directly or indirectly, own, manage, operate, join, control,
participate in, advise, or be connected in any manner with any person, firm,
corporation or other entity which is, or becomes engaged in the operation of pay
telephones to any customers of Seller within Mississippi, Alabama, Arkansas,
Florida, Louisiana, Texas or Tennessee or any person or entity within such
States. This covenant on the part of the Seller, its officers and shareholders
shall be construed as an agreement independent of any other provisions of this
Agreement. The parties hereto agree that this restrictive covenant may be
enforced in law or in equity, including, but not limited to, injunctive relief
against Seller. The parties hereto agree that in the event of the breach of this
restrictive covenant, the Purchaser and related entities may not have an
adequate remedy at law other than an injunction, or that damages will be
difficult to ascertain as the result of such breach and that, if an injunction
is sought by the Purchaser or related entities, Seller waives any requirement
that the Purchaser post any bond and the unsuccessful party agrees to pay any
attorneys' fees and court costs in the event the successful party receives its
requested relief. The Seller shall deliver at or before Closing Covenants Not to
Compete in the forms as set forth at Exhibit 8(1) and Exhibit 8(2).
9. CONDUCT OF BUSINESS.
From the date of this Agreement through the Closing Date, the Seller
shall:
(a) not enter into any material or unusual contracts affecting the
business of Seller without the prior written consent of the Purchaser;
(b) not create any security interests in any of the Assets.
(c) continue to operate the business in a routine and regular fashion.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.
The obligations of the Purchaser to acquire the Assets in accordance
with the terms of this Agreement and the obligations of Seller to sell the
Assets shall be subject to the fulfillment on, or prior to, the Closing Date of
each of the following conditions:
(a) Accuracy of Representations. All representations and warranties
of the Purchaser and Seller contained in this Agreement, and Exhibits hereto or
otherwise made in writing pursuant to this Agreement shall be true and correct
in all material respects on the Closing Date with the same force and effect as
though made on and as of the Closing Date.
(b) Performance of Obligations. The Seller and Purchaser shall have
performed and complied with all of the obligations and conditions required by
this Agreement to be performed or complied with by Seller and Purchaser on or
prior to the Closing Date.
(c) No Change of Condition and Due Diligence. The Assets shall not
have been adversely affected in any material way, directly or indirectly, which
would affect Purchaser's operation or use of the Assets.
11. BULK TRANSFERS.
The parties agree that they will waive compliance with the
requirements of any State law dealing with bulk transfers of assets either
pursuant to the Uniform Commercial Code or State laws relating to sales, service
or use taxes and Seller agrees to indemnify and hold Buyer harmless from any
loss, expenses, costs (including reasonable legal fees and reasonable expenses)
incurred by the failure to so comply. This Section, (S) 11, shall not be
interpreted to relieve Seller of its obligation to transfer the Assets free and
clear of all liens and encumbrances as otherwise provided in this Agreement.
12. COMPLIANCE WITH TAX PROVISIONS.
Seller agrees to indemnify and hold Purchaser harmless from and
against any and all sales, excise, use, income or other taxes due as a result of
this transaction. If the Seller does not pay any such taxes the Purchaser may
pay any such taxes at its sole discretion if Seller has failed to pay such taxes
within 10 days of Seller's receipt of written notice, pay said taxes and (i)
give prompt notice to Seller for reimbursement, such reimbursement to be made
within three (3) business days; or (ii) pay such taxes and deduct same as a
credit against the balance of the purchase price or any other consideration due
to Seller. This provision does not relieve Seller from its obligation to pay
such taxes if Purchaser does not avail itself of the foregoing remedies.
Purchaser shall not pay any such taxes which are the subject of dispute between
Seller and the applicable taxing authority provided Seller gives Purchaser
written notice of such dispute and provided that such non-payment does not
disrupt or interfere with Purchaser's continued use or revenues from the
purchased assets. Notwithstanding the foregoing, Purchaser knows of no taxes,
sales taxes, excise taxes, use taxes or other taxes (other than federal income
taxes) that will become due as a result of the transactions contemplated by this
Agreement.
Purchaser agrees to indemnify and hold Seller harmless from and
against any and all sales, excise, use, income or other taxes due as a result of
Purchaser's use or operation of the Assets on and after the Closing Date. If
the Purchaser does not pay any such taxes the Seller may pay any such taxes at
its sole discretion if Purchaser has failed to pay such taxes within 10 days of
Purchaser's receipt of written notice, pay said taxes and give prompt notice to
Purchaser for reimbursement, such reimbursement to be made within three
(3) business days. This provision does not relieve Purchaser from its obligation
to pay such taxes if Seller does not avail itself of the foregoing remedy.
Seller shall not pay any such taxes which are the subject of dispute between
Purchaser and the applicable taxing authority provided Purchaser gives Seller
written notice of such dispute. Notwithstanding the foregoing, Purchaser knows
of no taxes, sales taxes, excise taxes, use taxes or other taxes (other than
federal income taxes) that will become due as a result of the transactions
contemplated by this Agreement.
13. ADDITIONAL INSTRUMENTS.
The Seller agree from time to time, upon the request of the Purchaser,
to execute and deliver to the Purchaser such other instruments of sale,
transfer, assignment and conveyance and to take such other action as the
Purchaser may reasonably request to effectively vest ownership in the Purchaser
of all of the Assets sold, transferred, assigned and conveyed hereunder.
14. EXPENSES.
Each party hereto shall pay all expenses incurred by it in connection
with the negotiation, execution and performance of this Agreement, whether or
not the transactions contemplated herein are consummated, including the fees and
expenses of the counsel and accountants of each.
15. INDEMNIFICATION.
(a) Seller. The Seller agrees to indemnify the Purchaser fully and
hold the Purchaser harmless from and against and in respect of all demands,
actions or causes of action, assessments, losses, damages, liabilities,
judgments, costs and reasonable expenses asserted against or incurred by the
Purchaser arising out of a breach of any representation, warranty or agreement
of the Seller contained in this Agreement or in any Exhibit hereto or arising
out of any act or omission of the Seller prior to the Closing Date (except with
respect of liabilities specifically assumed by the Purchaser). In no event shall
Seller's aggregate obligation under this section, 15(a), exceed the purchase
price less amounts paid to Buyer from escrow after Closing. Further, Seller
hereby indemnifies Buyer against any claim or loss arising out of any matter (or
lien associated therewith) set forth at Exhibit 3-h. Upon either (i) receipt by
Buyer, in form reasonably satisfactory to Buyer, of direct indemnification by
▇▇▇▇▇▇▇▇ Industries, Inc. against any such loss or (ii) satisfaction by PTA of
any judgement lien or encumbrance arising out of any matter set forth in Exhibit
3-h, Buyer shall immediately consent to the release from Escrow of the sum of
$100,000.
(b) Purchaser. The Purchaser agrees to indemnify the Seller fully and
hold the Seller harmless from and against and in respect of all demands,
actions, or causes of action, assessments, losses, damages, liabilities,
judgements, costs and reasonable expenses asserted against or incurred by the
Seller arising out of a breach of any representation, warranty or agreement of
the Purchaser contained in this Agreement or in any Exhibit hereto or arising
out of any act or omission of the Purchaser after the Closing Date (except with
respect of liabilities specifically retained by the Seller).
(c) De Minimus Recovery Limitation. Notwithstanding the provisions of
sections 15(a) and 15(b) no party shall be liable for any indemnification or
breach of representation or warranty until the amount of all damages or losses
exceeds $25,000 in the aggregate, excluding. The limitations of this section
shall not apply to any operating liabilities, revenues or taxes or the
indemnification against loss for matters set forth on Exhibit 3-h. Once the
$25,000 limit is exceeded, the party liable shall be liable for the entire
amount of such loss or damage, including the $25,000 threshold amount.
(d) Method of Asserting and Handling Claims For Indemnification. 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.
16. SURVIVAL OF REPRESENTATION.
All representations, warranties and agreements contained in this
Agreement or any Exhibit hereto or made pursuant of the transactions
contemplated by this Agreement shall survive the Closing Date for a period of
eighteen months from the Closing Date.
17. MISCELLANEOUS PROVISIONS.
(a) Publicity. All notices to third parties and all other publicity
concerning the transaction contemplated by this Agreement shall be planned and
coordinated by Purchaser. Seller agrees not to make any public disclosure
regarding this transaction without the prior written approval of Buyer, except
as otherwise required by this Agreement, or applicable law. Nothing in this
paragraph 17 shall prevent Seller from disclosing elements of this agreement to
its agents, attorneys and accountants in the normal course of its business.
(b) Effect of Headings. The subject headings of the articles,
sections and paragraphs of this Agreement are included for purposes of
convenience only and shall not affect the construction or interpretation of any
of its provisions.
(c) Counterparts. This Agreement may be executed simultaneously in
multiple counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(d) Waiver of Compliance. Any failure of Purchaser, on the one hand,
or Seller, on the other hand, to comply with any obligation, covenant, agreement
or condition herein may be expressly waived in writing. Failure to insist upon
strict compliance with such obligation, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
(e) Availability of Equitable Remedies. Since a breach of various
provisions of this Agreement could not adequately be compensated by money
damages, Seller or Purchaser, as the case may be, may obtain, in addition to any
other remedy available to it, an injunction restraining such breach and specific
performance of such provisions of this Agreement without proof of loss or
imminent loss, and no bond or other security shall be required in connection
therewith.
(f) Parties in Interest. Nothing in this Agreement, whether express
or implied, is intended to confer any rights or remedies under or by reason of
this Agreement on any person other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third person to any party to this
Agreement, nor shall any provision give any third person any right of
subrogation or action over or against any party to this Agreement.
(g) Binding on Successors. This Agreement shall be binding on, and
inure to the benefit of, the parties to it and their respective heirs, legal
representatives and successors.
(h) Disclosure. No representation or warranty made by any party
hereto and no certificate or document furnished or to be furnished to any party
hereto pursuant to this Agreement contains or will contain any untrue statement
of a material fact.
(i) Exhibits. The exhibits referred to herein shall be attached
hereto and are a part of this Agreement as if fully set forth herein.
(j) Notices. All notices, requests, demands or other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been delivered five days after posting by certified United States Mail, with
postage prepaid:
(1) If to Purchaser:
Davel Communications Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇.▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
(2) If to Seller: ▇▇▇▇▇▇▇▇ Industries, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, V.P. and CFO
with copy to: ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇▇ - Promenade 2
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
or to such other person or address as a party shall furnish to the other parties
hereto in writing.
(k) Arbitration, Governing Law and Attorney Fees. All disputes
arising under this Agreement shall be settled under the Rules of Conciliation
and Arbitration of the International Chamber of Commerce by one arbitrator,
knowledgeable in the hospitality and telecommunications industry, appointed in
accordance with said Rules, with recourse, if necessary, to the International
Center for Technical Expertise of the ICC in accordance with the ICC's Rules for
Technical Expertise; provided however if the amount in dispute is more than
$100,000 three arbitrators shall be appointed upon the request of either party.
Unless the parties agree otherwise, the place of Arbitration shall be Chicago,
Illinois, U.S.A. Any agreed place of Arbitration must be in a country which is a
party to the Convention on the Recognition and Enforcement of Foreign
Arbitration Awards ("New York Convention"). The Arbitration proceedings shall be
conducted in the English language. The costs of Arbitration and the expenses of
the parties in preparation and attending the arbitration proceeding or any other
proceeding arising out of this Agreement, including but not limited to the
reasonable attorney fees of the parties, shall be charged to the party
substantially prevailing. Reasonable attorney's fees shall be computed by
reference
to the reasonable charge for such services without regard to the amount actually
paid or whether or not the services were performed by in-house counsel or
otherwise and shall include reasonable costs associated with such services. This
Agreement shall be governed and construed in accordance with the laws of the
State of Illinois.
(l) Entire Agreement. This Agreement, including the exhibits and
other documents referred to herein which form a part hereof, embodies the entire
agreement and understanding or the parties hereto in respect to the subject
matter contained herein. There are no restrictions, promises, warranties,
covenants or understandings, other than those expressly set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by the parties hereto.
(m) Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
(n) Non-Disclosure. Seller agrees that it shall not negotiate for the
sale, trade or other transfer of any of the assets which are the subject of this
Agreement after the execution of this Agreement and prior to the earlier of
termination of the Agreement or Closing.
(o) Recitals. The introductory recitals set forth on page one of this
Agreement are specifically incorporated into this Agreement and are a part
thereof.
18. ESCROW PROVISIONS.
On the date of Closing $533,000 in accordance with the provisions of
(P) 2(b) shall be paid into an Escrow by deposit to The Farmers State Bank and
Trust Company to secure payment of the items set forth at paragraphs 2(c),
3(a), 3(b), 3(c), 3(g), 3(h), 3(i), 3(l), 3(m), 3(n), 3(o), 3(q), 6(b), 6(c),
6(e), 11, 12, 14 and 15 of this Agreement. The Escrow Agreement shall provide
that the escrowed funds shall not be distributed except on direction of both
parties or upon order of a court of competent jurisdiction. The Seller may
direct the investment of escrowed funds, but all investments must be in either
United States Government or domestic Bank instruments denominated in United
States currency. All interest earned on the escrowed funds shall be allocated
proportionately as the amounts are distributed to the parties. The escrow
Agreement shall provide that both parties will submit an interim accounting to
each other within 90 days of Closing at which time, upon written direction to
the escrow agent signed by both parties, the escrow agent shall disburse all of
the escrow funds in accordance with said written direction, except such funds
as are necessary to secure Buyer's position in respect to the Kenner and
Ridgeland Contracts as set forth at (P) 2-c. The Escrow shall continue
consistent with the terms of (P) 2-c of this Agreement until all fund have been
disbursed. In all events the parties shall submit to each other a final
accounting no later than January, 2001 at which time, upon written direction to
the escrow agent signed by both parties, the escrow agent shall disburse all of
the escrow funds in accordance with said written direction. The terms of the
Escrow Agreement shall be substantially as set forth at Exhibit 18.
19. GUARANTY.
In accordance with the terms and subject to the limitations of the
Guaranty attached hereto at Exhibit 19(1) ▇▇▇▇▇▇▇▇ Industries Alabama, Inc.,
sole shareholder of Seller hereby fully guaranties the performance of this
Agreement in all of its particulars by Seller. Further, in accordance with the
terms and subject to the limitations of the Guaranty attached hereto at Exhibit
19(2), ▇▇▇▇▇▇▇▇ Industries, Inc., sole shareholder of ▇▇▇▇▇▇▇▇ Industries
Alabama, Inc., hereby fully guaranties the performance by ▇▇▇▇▇▇▇▇ Industries
Alabama, Inc. on its guaranty.
In accordance with the terms of the Guaranty attached hereto at Exhibit
19(3), Davel Communications Group, Inc. being the sole shareholder of Buyer
hereby fully guaranties the performance of this Agreement in all of its
particulars by Buyer.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day and year first above written.
PURCHASER:
TELALEASING ENTERPRISES, INC.,
an Illinois Corporation
__________________________________
By: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Its: Senior Vice President
Attest:
_____________________________
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Senior Vice President
Seller:
PAY TELEPHONE AMERICA, LTD.,
a Mississippi Corporation
__________________________________
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: President
ATTEST
_____________________________
By:
Its:
Guarantor
DAVEL COMMUNICATIONS GROUP, INC.,
an Illinois Corporation
__________________________________
By:
Its:
Attest
_____________________________
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Senior Vice President
Guarantor
▇▇▇▇▇▇▇▇ INDUSTRIES ALABAMA, INC.
_____________________________________________
By:
Its:
ATTEST
_______________________________________
By:
Its:
Subordinate
Guarantor
▇▇▇▇▇▇▇▇ INDUSTRIES, INC.
_____________________________________________
By:
Its:
ATTEST
_______________________________________
By:
Its: