ASSET PURCHASE AGREEMENT
THIS AGREEMENT, made and entered into this 15th day of November, 1999, by
and between AIH SERVICES, INC. (A Missouri Corporation) hereinafter sometimes
referred to as "Seller", and CANNON FINANCIAL COMPANY (A Kansas Corporation),
hereinafter sometimes referred to as "Buyer".
WHEREAS, Seller is the owner of the furniture, fixtures, equipment, client
lists, trade names, telephone numbers used or intended for use in the operation
and conduct of the businesses known as AIH RECEIVABLE MANAGEMENT SERVICES and
AIH EARLY RECOVERY SERVICES, located at 8300 Troost Avenue, Kansas City, Jackson
County, Missouri (the "Business") and;
WHEREAS, Seller desires to sell and Buyer desires to buy certain assets of
the Business.
NOW, THEREFORE, in consideration of the mutual covenants and agreement
contained herein, the parties agrees as follows:
1. SALE AND TRANSFER OF ASSETS. Seller agrees to sell, assign, transfer,
convey, and deliver to Buyer, and Buyer agrees to purchase from Seller, all of
Seller's right, title and interest in and to the following assets (herein
collectively the "Assets") free and clear of all liens, claims, mortgages,
pledges, charges, security interests and other restrictions or encumbrances
(collectively "Encumbrances") of any kind except as may be specifically provided
herein:
(a) The furniture, fixtures and equipment of Seller listed on Exhibit
"A" attached hereto and made a part hereof (the "Equipment");
(b) Client lists ("Client Lists"), files, records and books of
accounts owned and maintained by the Seller in connection with or relating to
the Business. A copy of the Client List is attached as Exhibit B.
(c) Seller's interest in the trade names "AIH RECEIVABLE MANAGEMENT
SERVICES" and "AIH EARLY RECOVERY SERVICES".
(d) Seller's business telephone number(s);
(e) All other assets and properties of any nature whatsoever held
exclusively for use in the Business (other than assets expressly excluded form
the sale as provided herein) including without limitation, machinery and
equipment, advertising materials, catalogs, correspondence, mailing lists, sales
materials and records, purchasing materials and records, files, and other
records used in or required in the Business as heretofore and presently being
conducted by the Seller. The Assets do not include (the "Excluded Property"):
(i) Cash and cash equivalents owned by the Seller; and
(ii) Accounts receivable owned by the Seller for the sale of
goods and services completed prior to closing this transaction.
2. PURCHASE PRICE. The purchase price to be paid by Buyer for the assets
shall be TWO-HUNDRED TEN-THOUSAND AND NO/100 DOLLARS ($210,000.00).
3. PAYMENT OF PURCHASE PRICE. The purchase price shall be paid in three
installments as follows:
(a) Subject to Paragraph 10(b) hereof, One hundred and five thousand
and no/100 ($105,000) shall be payable at Closing;
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(b) Fifty-Two Thousand Five Hundred Dollars ($52,500) shall be payable
on or before December 15, 1999; and
(c) Fifty-Two Thousand Five Hundred Dollars ($52,500) shall be payable
on or before March 31, 2000.
4. NO ASSUMPTION OF LIABILITIES. By entering into this agreement and
acquiring the Assets, the Buyer does not assume and shall have no liability for
any obligations or liability of the Seller of any kind, whether known, unknown,
direct or indirect, absolute or contingent, or mature or unmatured.
5. INDEMNITY. Seller agrees to protect, defend, indemnify and to hold
harmless Buyer, its successors and assigns against and in respect to any and all
loss, claim, damage, cost or expenses including reasonable attorney's fees
resulting from (1) any breach of any representations, warranties and agreements
of Seller herein contained; (2) the conduct of the Business prior to the closing
date; (3) the management of the Business by Seller after the closing date; (4)
any obligation or liability, whether accrued, absolute, contingent or otherwise
of Seller which is not expressly assumed by Buyer pursuant to the terms of this
Agreement. In the event that any liabilities which are the proper subject of
indemnification arise and become known to Buyer, Buyer will, within thirty (30)
business days, give Seller written notice thereof and Seller shall, within
thirty (30) days following receipt of such notice, discharge, pay or satisfy any
and all such liabilities or undertake to defend the same and Seller shall
immediately notify Buyer in writing of such discharge, payment or satisfaction.
The foregoing indemnification obligations shall survive the Closing. Buyer shall
have the right to offset any amounts which are properly subject to Seller's
Indemnification herein against amounts Buyer otherwise owes Seller pursuant to
Paragraph 3 hereof.
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Buyer agrees to protect, defend, indemnify and to hold harmless Seller, its
successors and assigns against and in respect to any and all loss, claim,
damage, cost or expenses including reasonable attorney's fees resulting from (1)
any breach of any representations, warranties and agreements of Buyer herein
contained; (2) the conduct of the Business after the closing date (except
liability arising from the management of the Business by Seller after the
closing date), In the event that any liabilities which are the proper subject of
indemnification arise and become known to Seller, Seller will, within thirty
(30) days, give Buyer written notice thereof and Buyer shall, within thirty (30)
days following receipt of such notice, discharge, pay or satisfy any and all
such liabilities or undertake to defend the same and Buyer shall immediately
notify Seller in writing of such discharge.
6. NOTICE. Any notice intended for Seller under this Agreement shall be
delivered personally or mailed by certified mail, return receipt requested,
postage prepaid, addressed to Seller at 8300 Troost Avenue, Kansas City, MO. Any
notice intended for Buyer shall be delivered personally or mailed by certified
mail, return receipt requested, postage prepaid, addressed to Buyer at 1900
Commerce Tower, 911 Main Street, Kansas City, Missouri 64106.
7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLER. Seller makes the
following representations and warranties to Buyer, each representation shall be
true and correct as of the sate of this Agreement and as of the date of closing
and the date of possession:
(a) Seller is a corporation duly organized and validly existing in
good standing under the laws of the State of MISSOURI, authorized to do business
in the state of MISSOURI and has the corporate power and authority entitled to
carry on its business in MISSOURI as presently being conducted and to enter into
and perform this Agreement.
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(b) The execution and delivery of this Agreement by Seller and the
performance of the transaction contemplated herein have been duly authorized by
all necessary corporation action on the part of Seller, including without
limitation its Board of Directors and shareholders, and this Agreement
constitutes the valid and legally binding obligations of Seller in accordance
with its terms.
(c) Seller will provide a copy of the minutes of the Board of
Directors of Seller authorizing the sale to Buyer at closing;
(d) The execution, delivery and performance of this Agreement and
other instruments and documents required or contemplated herein do not require
the consent of any third party, including any governmental or judicial authority
and, to the best of Seller's knowledge, neither conflict with, result in a
breach of, or constitute a default under any applicable law, judgment, order,
injunction, decree, rule, regulation or ruling of any court or governmental
instrumentality, nor do they conflict with, constitute a grounds for termination
of, result in a breach of, or constitute a default under, any agreement,
contract, instrument, license or permit to which the Seller is a party or by
which the Seller or its property or assets are bound.
(e) Seller has delivered to Buyer an unaudited balance sheet of Seller
dated September 30, 1999 (the "Balance Sheet") and unaudited statements of
income and cashflow of Seller for the twelve (12) months ended September 30,
1999 (collectively, the "Financial Statements"). The Financial Statements
present fairly in all material respects the financial position of Seller as of
September 30, 1999 and the results of operations and cashflow of Seller for the
twelve (12) months ended September 30, 1999 in conformity with generally
accepted accounting principles.
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(f) Since September 30, 1999, Seller has operated the Business in the
ordinary course of business consistent with past practices and there has not
occurred any material adverse change in the Business.
(g) To Seller's knowledge, no customer or supplier of Seller has
notified Seller that intends to discontinue or materially change its business
relationship with Seller or materially reduce the amount of business it does
with Seller.
(h) Except for the Excluded Property, the Assets constitute all the
properties and assets held exclusively for use in connection with the conduct of
the Business and constitute all of the assets reflected in the Balance Sheet
other than Assets dispersed of in the ordinary course of business since
September 30, 1999.
(i) Seller has now, and on the date of closing will have and convey to
Buyer, good and marketable title to all the Assets subject to no Encumbrance. No
other person, organization or entity has any right to the use or is in
possession of any of the Assets nor maintains a security interest or lien of any
nature affecting such Assets.
(j) The Equipment is in good working order at the date of closing.
(k) No judgment, award, order or decree of any nature has been
rendered against or with respect to Seller by any agency, arbitrator, court,
commission or other authority which is any way affects or relates to the Assets
or the Business. There are no claims, litigation, governmental or other
investigation or other proceeding pending or, to the knowledge of Seller,
threatened against Seller, the Assets or the Business.
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(l) Seller has not been notified or charged with nor is Seller aware
of any violation of any law, regulation or governmental order or requirement or
insurance company requirement relating to any aspect of the Business or the
Assets.
(m) Seller has made no material misrepresentations to Buyer relating
to the Business or the Assets.
(n) The Seller has no union employees or agreements.
(o) As of the date of possession and thereafter, but not the date of
Closing, there are no written contracts of employment between the Seller and the
employees of the Business. To the best of Seller's knowledge, there are no
claims of any kind asserted or threatened against Seller by any person, agency
or entity arising out of Seller's labor or employment relations.
(p) Seller shall continue to conduct the Business in its ordinary
course pending closing, shall not incur any liabilities or obligations other
than in the ordinary and usual course of business and Seller shall make no
change in the employment arrangement of any employee without Buyer's prior
written consent, which consent shall not be unreasonably withheld or delayed.
(q) Seller has filed all necessary federal, state, and local income
tax returns and has further filed all sales and use tax returns required by law
and has paid all taxes, license fees, assessments, and penalties which are due
and payable with respect to said returns. Seller further warrants and represents
that there are no unpaid taxes (i.e. income taxes, sales tax or otherwise),
which are payable by Seller as of the date of closing and Seller acknowledges
and warrants that Buyer assumes no liability whatsoever for any of Seller's
taxes, penalties, interest or related expenses.
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8. CLOSING DATE AND POSSESSION. The date of closing shall be on or before
November 15, 1999, and shall take place at the offices of Seller at 8300 Troost
Avenue, Kansas City, Missouri or such other place as the parties agree. The date
of possession shall be December 1, 1999. At the closing, Seller shall deliver to
Buyer such bills of sale, endorsements, assignments and other good and
sufficient instruments of conveyance and transfer, in form and substance
reasonably satisfactory to buyer, as shall be effective to vest in Buyer all of
Seller's right, title and interest in and to the Assets.
9. OTHER EXPENSE. Seller shall pay all operating expenses to the date of
closing. Buyer shall be responsible for all operating expenses incurred after
the date of possession.
10. CONTINGENCIES. This entire Agreement is subject to and contingent upon
the following:
(a) Buyer's satisfactory review of the books and records of Seller.
(b) Upon satisfaction of the above contingencies, and at least seven
(7) days prior to closing, Seller shall provide the names of all clients to
Buyer and at closing Seller shall deliver letters of understanding from the
clients listed on Exhibit C, representing at least eighty-percent (80%) of
current ongoing monthly placements. In the event all such letters of
understanding are not delivered at Closing then the One Hundred and Five
Thousand and no/100 Dollars ($105,000) otherwise payable at Closing shall be
held in escrow by Buyer's attorney until all such required letters of
understanding are delivered.
11. PRORATION OF EXPENSES. Personal property taxes on the Assets for 1999
shall be prorated as of the closing date based upon the actual 1998 liability
for such taxes. Buyer
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shall pay such taxes when due. The purchase price payable at closing shall be
reduced by the amount of taxes payable by Seller.
12. BROKERAGE. Seller is to pay the brokerage fee to Business
Opportunities Unlimited, Inc. pursuant to the terms and conditions of a previous
agreement between Seller and Business Opportunities Unlimited, Inc.
13. CONSTRUCTION GOVERNED BY LAWS OF MISSOURI. This Agreement shall be
governed by and construed in accordance with the laws of the State of MISSOURI.
14. ENFORCEABILITY. All terms and provisions of this Agreement shall be
binding on and shall inure to the benefit of and be enforceable to the parties
hereto and their respective successors, heirs and legal representatives.
15. AMENDMENT, CANCELLATION AND WAIVER. This Agreement may be amended or
cancelled and the provisions or conditions hereof may be waived only by written
instrument signed by all parties whose consent to such waiver or amendment is
necessary.
16. NONASSUMPTION OF LIABILITIES.
(a) No liabilities or obligations of Seller are being assumed by
Buyer but the same shall remain the liabilities and obligations of Seller solely
and shall be paid by Seller solely. Buyer has no liability or obligation with
respect to the Assets or the Business for any claim, transaction, event or other
matter, which existed or occurred on or prior to the closing, except such
obligations of Buyer as arise from this Agreement and any such liability or
obligation, whatever its origin or nature, shall continue as the liability or
obligation of Seller solely. Buyer is liable only for claims, transactions,
events, or other matters incurred by it and which occur on or after the closing
of this transaction. Conversely, Seller is liable only for
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claims, transactions, events or other matters incurred by Seller prior to
closing, except claims arising from Seller's management of the Business from
November 15, 1999 to December 1, 1999.
(b) Seller shall be solely responsible for all obligations to its
employees through November 30, 1999. It is understood the Buyer may thereafter
offer employment to Seller's employees and said employment shall commence on the
date Buyer and such employee(s) agree to terms of employment. It is understood
that Buyer is under no obligation to hire any of the employees of Seller. Seller
shall be responsible for all unemployment benefits and other payments due to
employees of Seller no hired by Buyer.
17. RISK OF LOSS. The Seller assumes all risk of loss due to fire or
other casualty up to the time of closing. Seller agrees to maintain the Assets
in good working order during the period Seller manages the Business after
Closing. In the event any such loss occurs prior to the time of closing or in
the event the business of Seller is closed or interrupted by reason of any event
not in the ordinary course of business, the Buyer shall have the right to
terminate this Agreement and, upon such termination, there shall be no further
liability on the part of the Seller or Buyer hereunder.
18. REPRESENTATIONS. Representations, warranties and agreements made by
the Seller shall survive the Closing. All representations, warranties, and
agreements made by the Buyer in this Agreement or pursuant hereto, except as
otherwise expressly stated, shall survive the Closing.
19. ENTIRE AGREEMENT. This Agreement sets forth the entire Agreement and
understanding of the parties in respect to the transaction contemplated hereby
and supersedes all prior agreements, communications, and understandings related
to the subject matter hereof.
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Business Opportunities Unlimited, Inc. has acted as Broker and Agent
for the Seller herein and makes no representations or warranties to the Buyer
nor does it warrant the correctness or authenticity of the financial information
or other business information which Seller has provided (or will provide) to
Buyer. The Buyer acknowledges that Business Opportunities Unlimited, Inc. has
advised and urges Buyer to make an independent inspection of the business and
books and/or property and in the event that any litigation shall result between
the Buyer and the Seller, both parties agree to save and hold harmless Business
Opportunities, Inc., its agents, employees and representatives against any
claims or costs arising out of this Agreement, except claims based upon the
gross negligence or intentional misconduct of Business Opportunities Unlimited,
Inc. or the respective obligations of Buyer and Seller to each other hereunder,
including reasonable attorney's fees.
20. POST-CLOSING MATTERS. At the request of Buyer, Seller will execute
and deliver such instruments and will take such other actions as necessary to
consummate the transactions contemplated by this Agreement and to put Buyer into
ownership, possession and control of the Assets.
21. Seller agrees to allow Buyer to utilize its space at 8300 Troost
Avenue, Kansas City, MO free of rent for a period of forty-five (45) consecutive
days commencing December 1, 1999. Seller furthers agrees to allow Buyer to
utilize the same space for an additional period of time commencing January 15,
2000 and running through February 29, 2000 ("Second Period"). The rent for this
Second Period shall be a total of $6, 450. In the event that Buyer should vacate
the premises prior to February 29, 2000, there shall be a pro-rata reduction in
the rent otherwise payable for the Second Period. The rent payable for the
Second Period shall be paid on or before February 29, 2000. Buyer shall give
Seller 10 day written notice of vacation.
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22. MANAGEMENT FEE. Seller agrees to sub-service the accounts which are
being purchased by Buyer pursuant to this Agreement for a period commencing the
date of Closing and running through November 30, 1999. The Seller agrees to be
responsible for all expenses incurred during this sub-servicing period and
Seller shall receive a Management Fee equal to the amount of all fees earned
during such period.
23. COVENANT NOT TO COMPETE. As a condition precedent to Buyer's
obligation to close, two principle employees of Seller, Jeff Tindle and David
Bragg, agree to execute and deliver at Closing restrictive covenants in the form
substantially the same as that attached as Exhibit C.
24. FORM 8-K. Seller acknowledges that financial statements of Seller for
the fiscal years ended September 30, 1997 and 1998 audited by Seller's
independent certified public accountants and unaudited financial statements of
Seller for the nine months ended June 30, 1999 must be prepared in accordance
with the rules of the Securities and Exchange Commission and included in Buyer's
Current Report on Form 8-K to be filed with the Securities and Exchange
Commission. Seller agrees to provide such financial statements to Buyer within
forty-five (45) days after the date of closing. Buyer and Seller agree to share
equally the cost of the audit up to and including the amount of $8,000, and
Buyer will pay Buyer's share of such cost to Seller promptly after delivery of
the audited and unaudited financial statements to Buyer. Buyer shall be
responsible for all costs of the audit in excess of $8,000.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the 15th
day of November, 1999.
BUYER:
CANNON FINANCIAL COMPANY
By: /s/ William B. Morris, President
--------------------- -------------
William B. Morris Title
SELLER:
AIH SERVICES, INC.
By: /s/ Jeff Tindle, President & CEO
--------------- -----------------
Jeff Tindle Title
Exhibits A, B, C and D are intentionally omitted, but will be made available to
the Securities and Exchange Commission upon request.
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