Exhibit 2(iv)
Asset Purchase and Supply Agreement
Xxxxx Xxxxxx, doing business as MidSouth Sign Erectors, LLC (hereinafter
"Buyer"), agrees to purchase certain assets and the operations (hereinafter
"Purchase") related to the installation business of MidSouth Sign Company, Inc.,
(hereinafter "MS"). Terms and conditions of such purchase are outlined below:
1. Effective date - Subject to certain conditions outlined below, the
effective date of the Purchase is July 1, 2002.
2. Assets acquired - A complete listing of all assets acquired is included
on Exhibit A. MS will continue to operate its repair and service
business.
3. Liabilities assumed - There are no liabilities of MS to be assumed by
the Buyer from this transaction.
4. Purchase price - The purchase price of the assets acquired on Exhibit A
is $139,500. This is payable as follows: Beginning July 1, 2002 through
June 1, 2003, Buyer will pay$6,213.41 per month. Payments will be
further divided as follows: $707.74 due on the 1st, 4005.67 by the 10th,
and $1,500.00 by the 15th. On July 1, 2003, Buyer will pay balance of
$64,939.08. Buyer has the right to prepay this balance at any point
without penalty. Once fully paid, Buyer will own the equipment free and
clear of any liens or encumbrances. MS will clear any existing liens
prior to final payoff by Buyer.
5. Supply agreement - Buyer and MS agree to enter into a supply agreement
whereby MS agrees to grant Buyer the first right of refusal to supply
installation services for MS. Buyer will be exclusive supplier of MS's
installation work at MS's quoted price to the customer less 10%. Buyer
will be paid a prorata portion of customer deposit (installation
services divided by total sale contract times amount of deposit
received, and the balance of the amounts due Buyer upon receipt of final
customer payment. Buyer is free to contract with other sign
manufacturers for business, but MS business shall always receive
priority installation while this supply agreement is in effect. MS
reserves the right to seek additional suppliers should Buyer's quality
and performance not meet reasonable standards. Buyer shall have a period
to correct any deficiencies prior to MS seeking other outside
contractors. Additionally, Buyer agrees to assist MS with location and
coordination of subcontractors outside the east Tennessee service area.
6. Term of the supply agreement - The supply agreement described in Item
5 will be valid for a period of 12 months (or sooner if the balance
due in Item 4 above is satisfied before July 2003), and renewed
automatically annually thereafter for 12 month periods unless notified
in writing three months prior to any renewal by either party. MS
agrees to compensate Buyer for installation services within 72 hours
of receipt of customer monies, with such payment based on the
prorating of installation services to total customer contract
services.
7. Sale of excess equipment - some equipment items purchased by Buyer and
listed on Exhibit A may be sold by Buyer, with all proceeds applied to
any outstanding principal balance, if any.
8. Non-competition - Buyer agrees to not compete for maintenance and
service business in the Knoxville and Tri-Cities metropolitan areas,
and extending south to Athens, Tennessee and west to Cookeville,
Tennessee. Both parties may pursue service and maintenance business in
the Chattanooga and surrounding areas, and Buyer agrees to not solicit
existing MS customers in those areas. Both parties acknowledge that
other areas are considered open areas to competition. MS agrees to not
pursue the installation business while the supply agreement in Item 5
is in effect.
9. Non-raid - For a period of twenty-four months, and other than the
employees listed on Exhibit B, Buyer agrees to not solicit or hire any
MS employees, recognizing such hire may be damaging to MS's business.
Should an employee leave MS, Buyer agrees to not solicit, hire, employ
or contract with such employee for a period of six months from date of
termination with MS.
10. Collection agent - In an effort to expedite collection and payment to
Buyer, MS authorizes Buyer to collect payments from MS customers and
forward such payments direct to MS within 48 hours.
11. Forwarding leads - from time to time, MS may provide Buyer with sign
forwarding leads from other manufacturers. Buyer agrees to compensate
MS with a five (5) per cent fee, payable upon receipt of customer
monies by Buyer.
12. Expenses - all expenses, including payroll, taxes, fuel, insurance
licenses, phone and other related to Buyer's ability to perform its
business under these agreements is the sole responsibility of the
Buyer. Buyer agrees to provide MS with a certificate of insurance
providing liability, damage and workers compensation coverage in
adequate amounts to satisfy MS's current insurance requirements.
13. Office and lot rental - MS agrees to rent office space and lot space
to Buyer at a rate of $500.00 per month, with reasonable access during
business and non-business hours for as long as the supply agreement is
in effect. Such rental is payable by the 5/th/ of each month.
14. Consulting services - MS agrees to pay Buyer $$1,200 per month for
consulting services related its sign business for as long as the
supply agreement is in effect. Such fee is payable by the 5/th/ of
each month.
15. Default by Buyer - Should the Buyer default in making its scheduled
payments to MS, the following conditions apply. Buyer shall have 5
business days each month to make payment. Should Buyer fail to make
payment within 5 business days, MS has right to offset any monies due
Buyer for services against payments in default. If such offsets do not
satisfy the amounts due and the payment (or any part of the payment)
is overdue by twenty days, upon ten days notice MS has right to
repossess equipment and Buyer waives all claims and agrees to turn
over the equipment in its possession. Any payments made to date will
be categorized as rental payments, and Buyer will have no right to
reimbursement for those monies.
16. Default by MS - If MS defaults on any payments to Buyer, Buyer has
right to hold product or proceeds from its installations until such
time as the payments are current. If MS defaults on third party debts
that may impact its ability to fulfill its obligations under this
agreement, Buyer has right to either make payments direct to third
party creditors to satisfy such defaults, or renegotiate this supply
agreement, or both, to protect its position with regards to the
business arrangement.
17. Warranties and representations by Buyer - Buyer represents that it is
a corporation in good standing in the State of Tennessee, and has the
right to enter into this agreement. Buyer further warrants it is
entering into this agreement in good faith with the intent of
providing contract services to MS. Buyer represents it will notify MS
in writing of a default of any provision of its obligations under this
agreement. Buyer acknowledges that some items of equipment, as
indicated on Exhibit A, are subject to liens and encumbrances by third
party and that MS must satisfy the secured creditors to fulfill parts
of this agreement.
18. Warranties and representations of MS - MS represents that it is a
corporation in good standing in the State of Tennessee, and has full
rights and authority to enter into this agreements. MS represents it
will obtain a full release of any security interests in the purchased
equipment by third party creditors. MS will promptly notify Buyer of
any default upon the part of MS with any secured, third party creditor that
may have an impact on this agreement.
19. Jurisdiction - This agreement shall be construed under the laws of the
State of Tennessee.
20. Notices - The parties shall provide written notices at the following
addresses:
If to MS:
President
MidSouth Sign Company, Inc
0000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
If to Buyer:
Xxxxx Xxxxxx
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
21. Entire agreement - This agreement is the entire agreement between the
parties.
For Buyer:
/s/ Xxxxx Xxxxxx Date__________
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For MS:
/s/ Xxxxxxx X. Xxxx Date__________
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