Evaluating the iProvo Asset Purchase Agreement

I took the time to sit down with a copy of the proposed purchased agreement with Broadweave (warning, PDF) and found a number of glaring holes and deficiencies in this arragement.

  • Broadweave Networks of Provo LLC is listed as the purchaser, yet no such corporation currently exists with the State of Utah. The purchase agreement is for a non-existent entity, therefore that more-or-less voids it right off the bat. (See 1st paragraph)
  • Provo is offering a 2-year warranty on the fiber. That's right: Provo foots the bill for fiber repairs for the first two years! (See 3(y)(ii) and nearby definitions)
  • Since Broadweave Networks of Provo LLC doesn't exist and has no valid business license, it's not a valid Purchaser per this agreement. (See 4(a))
  • Anyone with access to the Utah Courts' Xchange system want to make sure that it's true that there's no pending litigation against Broadweave? I've heard several rumors that residents in Traverse Ridge have had to go months or even years without primary phone line service from Broadweave and that several lawsuits have been threatened. (See 4(d))
  • I suppose that the lack of corporate existence for Broadweave Networks of Provo LLC could be construed as a misrepresentation. (See 4(f))
  • Provo is asking that Broadweave make a "good faith effort" to preserve existing services. Which, really, is broad enough to allow Broadweave to do whatever it likes. (See 5(g))
  • Provo's non-voting member on the board can be kicked out of meetings if they determine that there's "highly proprietary" information being discussed. Any bets that this will happen often? (See 5(c)… the second one since someone can't use ordered lists in Word properly)
  • If Broadweave sells the network just before going under, the city would lose control of the network and there would be nearly nothing left to pay remaining balances if Broadweave takes the money and runs. (See 5(d), again, the second one)
  • Broadweave will be bound to continue building the network to new developments, though the agreement uses a vauge "commercially reasonable time" phrasing that could easily let Broadweave off the hook. (See 5(q))
  • I noticed that nothing in Section 5 gives Provo the right to keep any upgrades or other improvements done to the network in the case of a default. If they replace the existing equipment with new equipment, then auction it off in bankruptcy proceedings, Provo could be left with a crippled network.
  • Now waitaminute… Broadweave gets to do its due diligence against Provo but nothing affords the city the same right. (See 6(u))
  • Broadweave is claiming that its Provo operation's address is the same as the Provo NOC. Kind of cheeky considering the company doesn't even exist, eh? (See 9(b))

My takeaway from this is that Provo hasn't covered all of its bases at all, creating a lease agreement that's very much in favor of the purchaser. Any lawyer-like people care to take a crack at it?

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3 Responses to Evaluating the iProvo Asset Purchase Agreement

  1. Mensch says:

    Just a quick point — just because you can’t find Broadweave Networks of Provo LLC on the Utah Division of Corporations website doesn’t mean it doesn’t exist. One forms an LLC by filing a typically one-page document with the Division, at which point the entity is deemed to exist. From that point, it takes 2-3 weeks to show up on the Division’s website. I’m guessing they formed the LLC just a couple of days ago as the acquisition entity for iProvo, which is not uncommon.

  2. Mike Taylor says:

    I did a search and found no pending litigation against Broadweave. However, there was a small claims judgment against them in 2006 for $2,310.67 and also two tax liens from the state of Utah dated May 12th, 2008 for amounts of $731.82 and $629.09. Looks like they didn’t pay their state withholding tax for November and December of 2007 so the state got a judgment against them.

  3. Pingback: Letter to Provo’s Municipal Council » Free UTOPIA!

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