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EXHIBIT 10.18
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement") is made and entered into as of
this 22nd day of November, 1999, by and between B. F. G. of Illinois, Inc., a
Delaware corporation, d/b/a/ Cashtel ("Seller"), Multi-Link Telecommunications,
Inc., a Colorado corporation ("Multi-Link"), and Xxxxxxx Communications
Services, Inc., a Colorado corporation ("Buyer"), a wholly owned subsidiary of
Multi-Link.
IN CONSIDERATION of the mutual covenants contained in this Agreement
and for other good and valuable consideration, the receipt and sufficiency of
which are acknowledged, Buyer, Multi-Link and Seller agree as follows:
Section 1. Purchase of Voice Mail Customer Accounts.
1.1 Accounts Purchased. Buyer agrees to purchase and Seller agrees to
sell, upon the terms and conditions contained herein, free and clear of all
encumbrances and adverse claims, the current Inactive Accounts (as hereinafter
defined) and the Active Accounts (as hereinafter defined) of customers of Seller
that are located in the Chicago and Detroit metropolitan areas, together with
all revenues and income therefrom and any accrued obligations of such customers
related to the Accounts (as hereinafter defined). For the purposes of this
Agreement an "Active Account" is a voice mail account serviced by Seller the
current user of which (i) has logged onto Seller's voice mail platform at least
three times in October 1999, and (ii) is located in an area that Buyer is
capable of servicing as of Closing (as hereinafter defined), and an "Inactive
Account" is a voice mail account serviced by Seller the current user of which
(i) has logged on at least one but no more than two times in October 1999, and
(ii) is located in an area that Buyer is capable of servicing as of Closing. The
Active Accounts and the Inactive Accounts will be referred to collectively as
the "Accounts."
1.2 Acquisition. At Closing, Buyer will purchase and Seller shall
assign and transfer to Buyer all of the Accounts for which Seller has furnished
to Buyer database records on a computer readable non-rewritable CD ROM disk
containing the information specified in Schedule A attached as a part hereof and
such other information as shall be reasonably required for Buyer to confirm that
the Accounts tendered by Seller qualify for purchase by Buyer.
1.3 Voice Mail Services. Subject to timely performance by Buyer of its
obligations under this Agreement and payment of the amounts set forth in
Subsections 1.6(c) and (d) below, Seller shall continue to furnish the Accounts
with voice mail services on its current platform of the same level and quality
as currently provided to the Accounts until January 31, 2000, at which xxxx
Xxxxxx shall discontinue all such services.
1.4 Transfer of Accounts. Buyer agrees to use its best efforts to
transfer the provisioning of the voice mail services for the Accounts from
Seller's platform over to Buyer's platforms on or before January 31, 2000.
Seller, without obligation to incur additional out of pocket costs unless
reimbursed by Buyer, will cooperate with Buyer's efforts to transfer the
Accounts to its platforms. Neither Seller nor Buyer shall make any surveys or
sampling studies about the prospects of converting the Accounts to Buyer's
platform, but shall proceed in good faith to do so as quickly as feasible in
Buyer's sole discretion and judgment.
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1.5 Customer Service. After Closing, Buyer shall be responsible for and
shall provide all customer inquiry and support services for the Accounts and
Seller will direct all customer inquiries received by it to Buyer and will
arrange to have calls made to Seller's customer service numbers forwarded to
customer service phone numbers designated by Buyer.
1.6 Price; Payment by Buyer. Buyer will pay the following amounts at
the times specified for purchase of the Accounts:
(a) At Closing, $16.00 in cash for each Active Account transferred
by Seller to Buyer for which Buyer has received the database
information to be provided by Seller under Subsection 1.2.
(b) At Closing, a prorated cash payment equal to a fractional part
of $35,000 determined by multiplying $35,000 by a number (the
"Multiplier") obtained by dividing (i) the number of Active Accounts
transferred to Buyer by Seller that Buyer will be able to xxxx during
the portion of Ameritech's November billing cycle remaining after
Closing, by (ii) the total number of Active Accounts transferred to
Buyer at Closing. Such Multiplier shall be rounded to the nearest
one-hundredth (1/100th).
(c) Provided that Seller has complied with Subsection 1.3 above,
on December 15, 1999, a payment of thirty-five thousand dollars
($35,000).
(d) Provided that Seller has complied with Subsection 1.3 above,
on January 15, 2000, a payment of thirty-five thousand dollars
($35,000).
(e) Provided that Seller has complied with Subsection 1.3 above,
within ten days after Buyer is informed of those Accounts billed in
December 1999 that were rejected by Ameritech Corporation ("Ameritech")
as "unbillable" due to disconnection of service, Buyer shall make to
Seller an adjusted cash payment equal to $4.00 multiplied by the number
of Active Accounts paid for under Subsection 1.6(a) at Closing,
adjusted by deducting from this amount an adjustment equal to $20 times
the number of Active Accounts whose initial xxxxxxxx submitted to
Ameritech were rejected as "unbillable" due to disconnection of the
customer's telephone service by Ameritech. Buyer will furnish Seller
with true and correct copies of all documentation supporting any
adjustments deducted from the purchase price and Seller shall be
entitled to examine into and challenge any grounds for deduction in
order to reasonably verify the correctness of the deduction. In the
event that the amount of payment required by this Subsection 1.6(e) is
less than zero, Seller shall refund to Buyer in cash such negative
amount within ten days of receiving written notice from Buyer.
1.7 Price; Payment by Multi-Link. Provided that Seller has complied
with Subsection 1.3 above, within ten days after Buyer is informed of those
Accounts billed in December 1999 that were rejected by Ameritech as "unbillable"
due to disconnection of service, Multi-Link shall deliver to Seller a common
stock payment of shares of Multi-Link's restricted common stock equal in market
value to the sum of: (1) $2.00 times the number of Active Accounts paid for by
Buyer under Subsection 1.6(a), less those Active Accounts for which initial
billing was rejected by Ameritech as "unbillable" due to disconnection of
telephone service, and
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(2) $6.00 times the number of Inactive Accounts transferred to Buyer at Closing,
less those Inactive Accounts for which initial billing was rejected by Ameritech
as "unbillable" due to disconnection of telephone service. The number of shares
will be equal to the total value of the stock to be issued, divided by the
closing bid price of one share of Multi-Link common stock at the close of
trading on the trading day immediately preceding the date of issuance of the
stock, rounded to the nearest whole share and will be issued according to the
terms of Section 1.8 below.
1.8 Common Stock. The common stock issued by Multi-Link will be
unregistered and restricted as to right of resale or distribution. Seller will
furnish Buyer with suitable investment representations satisfactory to Buyer's
counsel and confirm its intentions to acquire the stock for investment and not
for resale. Buyer will at the request of Seller and at no cost to Seller or its
successors (other than customary commissions and legal opinions that may be
required) include the stock issued to Seller in any securities registration
statement offering its securities to the general public which may be filed by
Multi-Link for its common stock within twelve months. However, Multi-Link shall
have no other obligation to register any stock issued to Seller beyond the
"piggy-back" rights granted to Seller. Accordingly, Seller acknowledges that it
will be unable to sell its stock without an appropriate exemption from Federal
and applicable state securities laws until the expiration of one year.
1.9 Refund by Seller. Notwithstanding any provision contained herein,
if Seller fails to comply with the provisions of Subsection 1.3 above (other
than minor and temporary cessation in the furnishing of voice mail services to
the Accounts by Seller), Seller shall refund all payments of cash and stock made
to Seller by Multi-Link and/or Buyer pursuant to Subsection 1.6 above; provided,
however, that Seller shall be entitled to retain $22.00 in cash for each
customer of Seller that has agreed to transfer such customer's Account to
Buyer's platform and whose Account is transferred to Buyer's platform.
1.10 Post Closing Transfers. If, on or before January 31, 2000, Buyer
elects to provide service to an area that Buyer was not capable of servicing as
of Closing, Seller shall transfer all voice mail accounts of Seller that are
located in such area that would have qualified as Active Accounts but for the
fact that Buyer was not capable of servicing such voice mail accounts as of
Closing and Buyer shall pay to Seller $22.00 for each such account , provided
however that Buyer shall not be obligated to pay for such accounts unless Seller
continues to furnish such accounts with voice mail services on its current
platform of the same level and quality as currently provided to such accounts
until January 31, 2000. Such payment shall be due and payable within 30 days of
Buyer's election to provide service to the area.
Section 2. Audit of Seller's Books.
Seller agrees to permit Buyer to perform, at Buyer's cost and expense,
an audit and examination of Sellers financial records and statements as
necessary for Buyer to comply with all Securities and Exchange Commission and
other governmental requirements arising from the transactions contemplated in
this Agreement. Seller will make its financial records available to Buyer's
authorized auditors for examination at reasonable times upon advance notice at
Seller's offices or the offices of Seller's accountants and attorneys and will
reasonably cooperate in the
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performance of the audit review, provided that any reasonable expenses incurred
by Seller to do so are directly paid or promptly reimbursed by Buyer.
Section 3. Seller's Representations and Warranties.
As an inducement to Buyer and Multi-Link to enter into this Agreement
and to consummate the contemplated transactions, Seller represents and warrants
to Buyer and Multi-Link, who have and will rely thereon in entering into this
Agreement and performing its terms, the following:
3.1 Authorization. Seller is a corporation in good standing under the
laws of Delaware and has full corporate power and authority to enter into and
perform this Agreement according to its terms, and the execution, delivery and
performance of this Agreement have been duly authorized by all necessary
corporate action on the part of Seller.
3.2 Validity. This Agreement has been duly and validly executed and
delivered by Seller and constitutes a valid and legally binding agreement of
Seller enforceable against it in accordance with its terms.
3.3 Compliance. The execution, delivery and performance of this
Agreement and the transactions provided for herein, and compliance with the
terms and provisions hereof, will not (1) conflict with or breach any provisions
of the Articles of Incorporation or By-Laws of Seller, (2) contravene any law
affecting or binding Seller or its properties, (3) conflict with, breach or
cause a default under any agreements binding on Seller, nor (4) require any
approval, consent or authorization of any governmental authority or other third
party.
3.4 Title to Customer Accounts. Seller has good and marketable title
to, and full right power and authority, to sell and convey to Buyer all the
Accounts and any accrued obligations of customers related to the Accounts, free
and clear of all liens, charges, encumbrances and claims of third parties.
3.5 Y2K Test. Seller performed a successful Y2K roll forward test on
its test voice mail platform and does not anticipate any operational problems
other than nonessential reporting problems with its voice mail platform as a
result of the new millennium.
3.6 Information Disclosure. All information furnished to Buyer by
Seller pursuant to this Agreement or as an inducement for Buyer to enter into
and perform this Agreement, including the information, about the Accounts and
customer information furnished pursuant to Subsection 1.6 above, is believed by
Seller to be true and correct and what it purports to be and is not false or
misleading in any material respect, nor omits information necessary to make any
statements made not misleading. Voice mail usage information used to determine
whether an Account is an Active Account or an Inactive Account is as of October
31, 1999, and database information furnished by Seller is as of November 17,
1999 and may change thereafter in the ordinary course of business, but Seller is
not aware of any material adverse change affecting the accuracy of such
information.
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Section 4. Buyer's Representations and Warranties.
As an inducement to Seller to enter into this Agreement and to
consummate the contemplated transactions, Buyer represents and warrants to
Seller, who has and will rely thereon in entering into this Agreement and
performing its terms, the following:
4.1 Authorization. Buyer is a Colorado corporation in good standing
under the laws of Colorado and has full corporate power and authority to enter
into and perform this Agreement according to its terms, and the execution,
delivery and performance of this Agreement have been duly authorized by all
necessary corporate action on the part of Buyer.
4.2 Validity. This Agreement has been duly and validly executed and
delivered by Buyer and constitutes a valid and legally binding agreement
enforceable against Buyer in accordance with its terms.
Section 5. Multi-Link Representations and Warranties.
As an inducement to Seller to enter into this Agreement and to
consummate the contemplated transaction, Multi-Link represents and warrants to
Seller, who has and will rely thereon in entering into this Agreement and
performing its terms, the following:
5.1 Authorization. Multi-Link is a Colorado corporation in good
standing under the laws of Colorado and has full corporate power and authority
to enter into and perform this Agreement according to its terms, and the
execution, delivery and performance of this Agreement have been duly authorized
by all necessary corporate action on the part of Buyer.
5.2 Validity. This Agreement has been duly and validly executed and
delivered by Multi-Link and constitutes a valid and legally binding agreement
enforceable against Multi-Link in accordance with its terms.
Section 6. Conditions Precedent of Buyer and Multi-Link.
The obligation of Buyer and Multi-Link to consummate the transactions
contemplated by this Agreement is subject to the fulfillment at or prior to
Closing of each of the following conditions unless waived by Buyer and
Multi-Link:
6.1 Performance by Seller. Seller shall have performed and complied
with all of the terms, provisions and conditions of this Agreement to be
performed or complied with at or before Closing.
6.2 Accuracy of Representations and Information. All of the
representations and warranties made by Seller in this Agreement shall be true
and correct in all material respects as of the date of the Closing and all
information furnished to Buyer by Seller shall be accurate in all material
respects.
6.3 Xxxxxxx Acquisition. Buyer shall have closed the acquisition of the
assets from Xxxxxxx Communications, Inc., an Indiana corporation ("Xxxxxxx") as
contemplated in the Asset
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Purchase Agreement dated as of September 17, 1999, by and between Buyer,
Multi-Link, Xxxxxxx and Xxxxx X. Xxxxxxx, Xx.
6.4 Verification of Customers. Buyer shall have reasonably satisfied
itself of the number of Active Accounts and Inactive Accounts qualified for
purchase by Buyer which have been tendered by Seller for delivery at Closing.
6.5 UCC, Tax; Litigation Search. Buyer shall be reasonably satisfied by
the results of a UCC, tax and litigation search of Seller to be conducted by
Buyer.
Section 7. Closing.
7.1 Time and Place of Closing. The "Closing" means the time when Seller
conveys and transfers title to the Accounts to Buyer as agreed in this Agreement
and receives the payments from Buyer to be paid at Closing. Closing will occur
at the offices of Buyer in Indianapolis, Indiana or at such other place in
Chicago or Indianapolis as Buyer may select and is to occur as soon as
practicable (but not later than five business days) after satisfaction or waiver
of the conditions set forth in Section 6 hereof.
7.2 Deliveries of Seller. At Closing Seller shall deliver to Buyer the
following:
(a) a Xxxx of Sale and Assignment dated the date of Closing
transferring all of Seller's right, title and interest in and to the
Accounts described in Section 1, including any accrued obligations of
customers related to the Accounts, in form and content satisfactory to
Buyer's counsel;
(b) a certificate of Seller's Secretary or an Assistant Secretary
certifying that the Buyer is a corporation in good standing with the
State of Delaware and the State of Illinois and certifying to the due
adoption by Seller's Board of Directors of resolutions authorizing the
execution, delivery and performance of this Agreement and the
transactions contemplated herein and that such resolutions remain in
full force and effect; and
(c) a certificate , duly executed by Seller, certifying that
Seller has performed and complied with all of the terms, provisions and
conditions of this Agreement to be performed by it at or prior to
Closing and that its representations and warranties are true in all
material respects as of the date of this Agreement and as of Closing.
(d) certificates of existence of Seller, dated no more than ten
days prior to the date of Closing, issued by the Secretary of State of
the State of Illinois and the Secretary of State of the State of
Delaware.
(e) such other instrument of sale, transfer, conveyance and
assignment as Buyer or Multi-Link may reasonably request to effect the
transfer of the Accounts contemplated hereby.
7.3 Deliveries of Buyer. At Closing Buyer shall deliver all cash
payments of the purchase price payable at Closing.
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Section 8. Miscellaneous Provisions.
8.1 Liabilities. Buyer does not assume any liabilities or obligations
of Seller to third parties and this Agreement will not confer any rights or
remedies on any person other than the parties hereto. Except for ongoing
obligations arising, accruing and relating to periods from and after the date of
Closing with respect to the Accounts, neither Buyer or Multi-Link assumes any
debts, obligations or liabilities of Seller. The obligations under Subsection
1.6 of Multi-Link and Buyer are joint and several. After the Closing, Buyer is
to furnish certain services as specified herein to Accounts purchased by Buyer.
8.2 Expenses. Each party will pay all of its own costs, fees and
expanses incurred incident to the negotiation and preparation of this Agreement
and its performance and compliance with all agreements to be performed by it,
including the fees, expenses and disbursements of its respective attorneys and
accountants.
8.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado, without regard to its
conflicts of law principles.
8.4 Legal Fees. The prevailing party shall be entitled to recover its
legal fees and expenses, including reasonable accounting and attorney's fees,
incurred in connection with any legal action arising out of or related to this
Agreement.
8.5 Indemnity. Seller shall indemnify and hold Buyer and Multi-Link
harmless from and against all damages, claims, causes of action, losses and
expenses, including reasonable attorney's fees and expenses incurred in
connection with or arising from (a) any non-fulfillment or breach by Seller of
any of its agreements or covenants contained in this Agreement, (b) any breach
of any warranty or the inaccuracy of any representation or warranty of Seller
contained in this Agreement or any certificate, schedule or other information
delivered by or on behalf of Seller in furthering the transactions contemplated
hereby, and (c) the operation of the Business prior to the Closing.
8.6 Assignment. Neither Buyer nor Seller may assign this Agreement, or
any rights hereunder, to any other person without the prior written consent of
the other party.
8.7 Entire Agreement; Amendments. This Agreement contains the entire
understanding of the parties hereto with regard to the subject matter contained
in this Agreement and supersedes all prior understandings or agreements with
respect. thereto. This Agreement may only be modified or amended by a writing
signed by the party to be bound thereby.
8.8 Confidentiality and Use of Information. Each party hereto shall
hold in confidence all documents, materials and information obtained from the
other party in connection with the negotiation and investigation concerning the
transactions covered by this Agreement ("Confidential Information"), and shall
not disclose any Confidential Information to third parties without the prior
written consent of the party providing the Confidential Information, nor use the
Confidential Information for any purpose not contemplated by this Agreement. If
the acquisition of assets does not proceed for any reason, Buyer will
immediately return and remove from its systems and files any Confidential
Information obtained from Seller and will not use such
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information for any purpose. The confidentiality obligation shall not apply to
prevent any disclosures made in connection with any lawsuit involving the party
or any disclosures required by law. Information is not confidential to the
extent (a) it was lawfully in the possession of a party prior to receipt from
the other, or (b) is known to the public without fault or breach of
confidentiality by the party possessing the information.
8.9 Publicity. Seller shall not issue any press release or public
disclosure of this Agreement until it has Closed. Buyer may make such
announcements or press releases as Buyers counsel deems appropriate or required
by law.
8.10 Notices. Any notice, consent, demands or communications given to a
party hereto ("Notices") shall be in writing and shall be deemed to have been
given (a) on the date of receipt of the Notice when sent via first class United
Stated registered Mail, return receipt requested, postage prepaid to the address
listed below for the party, (b) upon actual delivery of the Notice when hand
delivered at the address listed bellow for the party , and (c) the day after the
date sender has received confirmation of the transmission of the Notice to the
facsimile number of the party listed below, provided the party giving the Notice
mails a copy of the Notice within two days after transmission by facsimile to
the address of the notified party listed below. The addresses and facsimile
numbers of the parties as of the date of this Agreement are:
Multi-Link or Buyer: Xxxxxxx Communications Services, Inc., or
Multi-Link Telecommunications, Inc.
Attn: Xxxxx Xxxxxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Facsimile No. (000) 000-0000
B. F. G. of Illinois: Cashtel, Inc
000 Xxxxx Xxxxxxxx Xxx., Xxxxx 000
Attn: Xxxxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile No. (000) 000-0000
8.11 Remedies. The rights and remedies of the parties hereunder are
cumulative and are not in lieu of, but are in addition to, any other rights or
remedies which the parties may have at law or equity. Seller, in addition to any
other remedies, shall be entitled to discontinue providing voice mail services
to any customers purchased by Buyer if any of the payments due Seller hereunder
remain unpaid in whole or in part for more than ten days after the due date.
8.12 Successors and Assigns; Counterparts. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns and may be executed in one or more counterparts, each of
which shall be considered an original counterpart and all of which shall be
considered to be one agreement and shall become effective and binding when each
party has executed and delivered one counterpart to the other party.
8.13 Termination. The obligation of each party to proceed with the
terms of Section 1 and Section 2 hereof and consummate the acquisitions
contemplated hereby shall terminate and
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be of no further force and effect upon notice given by one party to the other
party hereto in the event the Closing has not occurred on or before November 30,
1999. No such termination shall release or be construed as releasing any party
from any liability which may have arisen under the terms hereof. Immediately
after termination, Buyer will remove and return to Seller any files or customer
information in whatever form furnished by Seller from any equipment or
facilities in the possession or control of Buyer and will make no further use of
such information without Seller's written consent.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
B. F. G. OF ILLINOIS, INC. XXXXXXX COMMUNICATIONS SERVICES, INC.
By By
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Its President Its
MULTI-LINK TELECOMMUNICATIONS, INC.
By
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Its:
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