chris' affidavit

8/8/2019 Chris' Affidavit

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STATE OF UTAH ): ss.couNTY oF WASHTNGTON)ChrisPhillips, eing irstdulysworn,deposesand states:1. I am a residentof WashingtonCounty,Stateof Utah,over he ageof 21

years,and competent o testifyas set forth herein.2. I moved o St. George n November f 1992 o sellwatersofteners nd

also to sell reverseosmosiswater purification ystems(hereinafter eferred o as"RO's").

3. In 1994, s tartedmy own business, ellingand servicingwatersoftenersand RO's. The name of businessbecameAdvancedAqua Systems the"Business").

4. Earlyon, I began o focuson the serviceand maintenance f all brandsof water softeners nd RO's,and on delivering alt,sinceno one else n St .Georgewas doing hat effectively t the time. I couldsee the value of long ermcustomer elationships, hereasotherswere ocusedon selling he equipment ndgetting he larger mmediate alescommission.

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5. Sometime n 1994, boughtan ACT computer oftwareprogram or theBusiness.This programallowedme to buildup a databaseof customers,racktheirservicehistories, nd send out reminderso them when maintenance rreplacementilterswere due.

6. I worked hard o expand he customerbase. I contactedall the plumbersin town and sold hemwatersofteners nd RO'sat lowerprices n order o getreferrals or the long-term erviceand maintenance ork. The plumberswere notinterestedn servicingor maintaining ystems;heypreferred o sell and installequipment. put my stickerson al l the equipment o I wouldget the servicecalls.I also arrangedwith the plumbers hat when hey nstalledhe watersofteners rRO's heywouldcallme and I wouldcomeout and givea brieforientationo thecustomer egarding he need or regularmaintenance nd replacement f worn outfiltersand otherparts,as well as for delivery f salt.

7 In 1997, hiredan advertising gencyand over he next 1 , yearsspent$50,000on advertising: V, radio,newspaper, ellowpages,and directmail. Theadvertising as successful n increasing ur name recognition, ut over ime Iconcluded hat he bestway to build he Businesswas personalcontactwithplumbers, ontractors,ealtorsand homeowners. joined the SouthernUtahHomebuilders ssociation nd got to know he generalcontractorsn town andreceivedmany referrals nd leads rom hem.

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8. Throughout he periodof time when I owned he Business, workedhardto providequalityserviceand keepcareful ecordsso that I coulddeliverwhat hepeopleneeded,when they needed t.

9. As the Businessexpanded, hiredothers o help me. I generallyhadatleastone full ime sales and service echnicianworking or me after1997,as wellas an officemanager.

10. In 2OO2, hiredBrentCopelandas a salesmanand installer.Over henext 5 years,Brentgraduallyacquireda 5Oo/ownershipnterest n the Business.11, In 2006,as Brentwas approaching 5Ao/ownership nterest n the

Business, e offered o buy my half of the Business or $4,500per monthover 10years. Initially, turnedhim down. He made he same offerseveraltimesover henextyear. I acceptedhisoffer n May of 2OO7.The totalpurchaseprice or my50% nterestwas $544,750.00, ayable n monthlypaymentsof $4,500or moreover 9 years and77, months,without nterest.

12. Copelandmade he monthlypayments rom May 20O7 hroughDecember 008.

13. Almost he entirevalueof the Business hat I sold o BrentCopeland n2OO7 esided n the customer nformation, atabase, oodwilland businessmodelI had developed tarting n 1994. The value of the tangibleassets a saltdeliverytruckand some equipment,ools and nventory probablydid not exceed$25,000.

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14. When I sold he Business o BrentCopeland n 20O7, herewereover4,000customers n the database.

15. In February, OO9, rentand LindaCopeland iled a joint petition orreliefunder Chapter7 of the BankruptcyCode,commencingBankruptcyNo.09-211 5 in the UnitedStatesBankruptcyCourt or the Districtof Utah(the"Bankruptcy').

16. After iling he Bankruptcy,Copelands ontinuedo use the customerinformation nd databaseand to operate he Business,us t as before. Theywanted o keep he Business or themselves nd at the same ime dischargeheremaining yearsand47. monthsof payments hey stillowed o me. I was notwill ing o allow hat o happen.

17. I madean offer o the Bankruptcyrustee o buy the Business rom heBankruptcyestate. The trusteeacceptedmy offer, subject o approvalby theBankruptcyCourt. Copelandsobjected o my offer. After engthynegotiations, esigneda settlement greement the"Settlement greement").A copyof theSettlement greement s attached o thisaffidavit s Exhibit1. Under heSettlement greement,Copelandsagreed o withdraw heir objectiono my offer obuy he Business rom the Bankruptcy state. They alsoagreed o surrender ll ofthe customer nformation, atabase, al tdelivery outebooks,and paperrecordsof the Business o me. Theyagreednot to retainor transferany of the tangibleorintangible ssetsof the Business.


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18. I agreedas partof the settlementhat Copelands ould competewithme, but only by starting rom scratch o develop heir own customer is tanddatabase.They were supposed o walk away romthe existing ustomersand startover. I did agree o le t them havea smallnumberof specificallydentified xistingcustomers, ut he rest of the customersweresupposed o be mine.

19. The sale of the Bus inesso me was approvedby the BankruptcyCourt.A copyof the BankruptcyCourt'sorder s attachedheretoas Exhibit2. lt requiresCopelandso walk away rom he existingBusiness.

20. The transferof all the tangibleand intangible ssetsof the Businessfrom Brentand LindaCopeland o me tookplaceon or about November13,2009.After hatdate, hey were not supposed o retainor use, directlyor indirectly, nyof the customer nformation, atabaseor paper ecordsof the Business. f theywanted o compete, hey were supposed o do so by starting rom scratch.

21. From he time of the transferof the Business o me in November, 009,and continuingo the present,Copelands ave repeatedly nd continuouslybreached he Settlement greement.Rather han urningover all the customerinformationo me, hey retained nd kept or themselves ervice ecordsanddatabase nformation, hich hey haveused o contactall my customers.Theyhave argetedmy customerswithphonecalls,personal isitsand mailers.Theyhave misrepresentedhemselves s the originalownersof the Businessand as the

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purchasers f the Business.They haveremovedor tried o removemy stickersfrom equipment n customers'homes, eplacinghem with theirownstickers. Theyhave ransferred he salt route o Walters,whichwas specificallyorbiddenby theSettlement greement.

22. Waltershas misappropriatedhe salt routecustomer nformation nd susing t to try to take hat part of the Business way rom me. He hasmisrepresentedo customers hat he bought he salt routebusiness rom me. Hehas also ried o removemy stickers rom equipmentn customers' omesand hastried o replacemy stickerswith his own and with Copelands' tickers.

23. One of the keys o the successof the Business ies n keeping rack ofcustomerservice records. \Mren it is time for parts o be replacedor other serviceto be performed, he customercan be contactedand the service offered o them.As the customers ainconfidencen the knowledge nd integrity f the serviceprovider,hey come o relyon periodic ervicecallsand willinglypay for them.Using he ACT program,we can schedule ustomersor servicecalls hroughoutthe year. Sincebuying he Business rom he BankruptcyEstate n November,2009,virtuallyeverycustomerwe havecalled or regularserviceeitherhas alreadybeen contacted y Copelands r Walters,or is beingcontactedwhen we callorshortlyafterwe havecalled. This has been happening n a dailybasis. lt wouldbe impossiblef Copelands nd Waltersdid not have he ACT programand servicerecords.

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24. By their actions,Copelandsand Waltershaveconfusedand alienatedmany of the customers. By doingso, they are destroyinghe value of the customerbase hat was transferredo me throughour Settlement greementand the sale ofthe Business o me by the BankruptcyCourt. An exampleof the effectof theirwrongful nterferencen the Business s shown n a recentemail chainwith acustomer.A copy of this email chain s attachedheretoas Exhibit3. Thecustomer's ame has been redacted o protect he customer.

IDATED his V day of April,2O1O.

2010.SUBSCRIBEDNDSWORN o beforeme his tlt*t dayof Aprit,rolAffnFucosrYmrmnr.a.s. t.sEoRCLEs?.GEOnoE,ttftsrfrcolflEXPgTATEOF 'TAH

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chris' affidavit

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