ACQUISITION AGREEMENT
Agreement dated as of April 28, 1999 between Austin Land &
Resources, Inc., a Nevada corporation ("ALRI"), and Tangible
Investments of America, Inc., a Pennsylvania corporation ("TIAI").
The parties agree as follows:
1. The Acquisition
1.1 Purchase and Sale Subject to the terms and conditions
of this Agreement. At the Closing to be held as provided in Section
2, ALRI shall sell the ALRI Shares (defined below) to the
shareholders of TIAI, and the shareholders of TIAI shall purchase
the ALRI Shares from ALRI, free and clear of all Encumbrances other
than restrictions imposed by Federal and State securities laws.
ALRI shall change it's name to Tangible Asset Galleries, Inc.
1.2 Purchase Price. ALRI will exchange 16,000,000 shares of
its restricted common stock (the "ALRI Shares") for all of the
outstanding capital stock of TIAI (the "TIAI Shares"). The ALRI
Shares shall be issued and delivered to the Shareholders of TIAI as
set forth in Exhibit "A" hereto.
2. The Closing.
2.1 Place and Time. The closing of the sale and exchange of
the ALRI Shares for the TIAI Shares (the "Closing") shall take place
at the Law Offices of M. Xxxxxxx Xxxxxx, 000 Xxxxxxx Xxxxxx Xxxxx,
Xxxxx 000, Xxxxxxx Xxxxx, XX 00000 no later than the close of
business (Orange County California time) on April 30, 1999, or at
such other place, date and time as the parties may agree in writing.
2.2 Deliveries by TIAI. At the Closing, TIAI shall deliver the
following to ALRI:
a. Certificates representing the TIAI Shares, duly
endorsed for transfer to ALRI and accompanied by any applicable
stock transfer tax stamps; TIAI shall cause immediately change those
certificates for, and to deliver to ALRI at the Closing, a
certificate representing the TIAI Shares registered in the name of
ALRI (without any legend or other reference to any Encumbrance).
b. The documents contemplated by Section 3.
c. All other documents, instruments and writings
required by this Agreement to be delivered by TIAI at the Closing
and any other documents or records relating to TIAI's business
reasonably requested by ALRI in connection with this Agreement.
2.3 Deliveries by ALRI. At the Closing, ALRI shall deliver the
following to TIAI:
a. The ALRI Shares for further delivery to the TIAI
shareholders as contemplated by section 1.
b. The documents contemplated by Section 4.
c. All other documents, instruments and writings
required by this Agreement to be delivered by ALRI at the Closing.
3. Conditions to ALRI's Obligations.
The obligations of ALRI to effect the Closing shall be subject to
the satisfaction at or prior to the Closing of the following
conditions, any one or more of which may be waived by ALRI:
3.1 No Injunction. There shall not be in effect any
injunction, order or decree of a court of competent jurisdiction
that prevents the consummation of the transactions contemplated by
this Agreement, that prohibits ALRI's acquisition of the TIAI Shares
or the ALRI Shares or that will require any divestiture as a result
of ALRI's acquisition of the TIAI Shares or that will require all or
any part of the business of Austin Land & Resources, Inc. to be held
separate and no litigation or proceedings seeking the issuance of
such an injunction, order or decree or seeking to impose substantial
penalties on ALRI or TIAI if this Agreement is consummated shall be
pending.
3.2 Representations, Warranties and Agreements. The
representations and warranties of TIAI set forth in this Agreement
shall be true and complete in all material respects as of the
Closing Date as though made at such time, (b) TIAI shall have
performed and complied in all material respects with the agreements
contained in this Agreement required to be performed and complied
with by it at or prior to the Closing and (c) ALRI shall have
received a certificate to that effect signed by an authorized
representative of TIAI.
3.3 Regulatory Approvals. All licenses, authorizations,
consents, orders and regulatory approvals of Governmental Bodies
necessary for the consummation of ALRI's acquisition of the TIAI
Shares shall have been obtained and shall be in full force and effect.
4. Conditions to TIAI's Obligations.
The obligations of TIAI to effect the Closing shall be subject to
the satisfaction at or prior to the Closing of the following
conditions, any one or more of which may be waived by TIAI:
4.1 No Injunction. There shall not be in effect any
injunction, order or decree of a court of competent jurisdiction
that prevents the consummation of the transactions contemplated by
this Agreement, that prohibits ALRI's acquisition of the TIAI Shares
or TIAI's acquisition of the ALRI Shares or that will require any
divestiture as a result of ALRI's acquisition of the Shares or
TIAI's acquisition of the ALRI Shares or that will require all or
any part of the business of Austin Land & Resources, Inc. or
Tangible Assets of America, Inc. to be held separate and no
litigation or proceedings seeking the issuance of such an
injunction, order or decree or seeking to impose substantial
penalties on ALRI or TIAI if this Agreement is consummated shall be
pending.
4.2 Representations, Warranties and Agreements. The
representations and warranties of ALRI set forth in this Agreement
shall be true and complete in all material respects as of the
Closing Date as though made at such time, (b) ALRI shall have
performed and complied in all material respects with the agreements
contained in this Agreement required to be performed and complied
with by it at or prior to the Closing and (c) TIAI shall have
received a certificate to that effect signed by an authorized
representative of ALRI.
4.3 Legal Opinion. TIAI shall have received an opinion from
appropriate counsel to ALRI dated the Closing Date, to the effect
that ALRI is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada and has the
requisite power and authority to own, lease and operate its
properties and corporate power to carry on its business as now being
conducted; all of the outstanding shares of ALRI are duly and
validly issued, fully paid and non-assessable and the issuance of
such shares has complied with the applicable Federal and State
securities laws and the regulations promulgated thereunder; ALRI is
duly qualified and in good standing as a domestic corporation and is
authorized to do business in all states or other jurisdictions in
which such qualification or authorization is necessary and there has
not been any claim by any other state of jurisdiction to the effect
that ALRI is required
to qualify or otherwise be authorized to do
business as a foreign corporation therein; all persons who have
executed or will execute this Agreement on behalf of ALRI or its
Shareholders have been duly authorized to do so; to the best
knowledge of such counsel there is no action, suit or proceeding and
no investigation by any governmental agency pending or threatened
against ALRI or the assets or business of ALRI that could have a
materially adverse effect on the financial condition of ALRI or
TIAI. Such counsel shall also opine as to the tradeability of all
free trade Shares of ALRI.
4.4 Regulatory Approvals. All licenses, authorizations,
consents, orders and regulatory approvals of Governmental Bodies
necessary for the consummation of ALRI's acquisition of the TIAI
Shares and TIAI's acquisition of the ALRI Shares shall have been
obtained and shall be in full force and effect.
4.5 Resignations of Director. All directors of Austin Land &
Resources, Inc. whose resignations shall have been requested by TIAI
not less than ten Business Days before the Closing Date shall have
submitted their resignations or been removed effective as of the
Closing Date.
5. Representations and Warranties of TIAI.
TIAI represents and warrants to ALRI that, to the Knowledge of TIAI
(which limitation shall not apply to Section 5.3), and except as set
forth in the TIAI Disclosure Letter:
5.1 Organization of TIAI; Authorization. TIAI is a
corporation duly organized, validly existing and in good standing
under the laws of Pennsylvania with full corporate power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate
action of TIAI and this Agreement constitutes a valid and binding
obligation of TIAI; enforceable against it in accordance with its
terms.
5.2 Capitalization. The authorized capital stock of TIAI
consists of 1,000 shares of common stock, no par value, and no
shares of preferred stock. As of the date hereof 490 of such common
shares of TIAI were issued and outstanding. No shares have been
registered under state or federal securities laws. As of the
Closing Date, all of the issued and outstanding shares of common
stock of TIAI are validly issued, fully paid and non-assessable.
Except with respect to warrants to purchase up to 350,000 shares
subsequent to completion of the Closing (reflecting the issuance of
the ALRI Shares) at $1.00 per share, vesting over five years, as of
the
Closing Date there will not be outstanding any warrants, options
or other agreements on the part of TIAI obligating TIAI to issue any
additional shares of common or preferred stock or any of its
securities of any kind. TIAI will not issue any shares of capital
stock from the date of this Agreement through the Closing Date.
5.3 No Conflict as to TIAI. Neither the execution and delivery
of this Agreement nor the consummation of the sale of the TIAI
Shares to ALRI will (a) violate any provision of the certificate of
incorporation or by-laws of TIAI or (b) violate, be in conflict
with, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under any
agreement to which TIAI is a party or (c) violate any statute or law
or any judgment, decree, order, regulation or rule of any court or
other Governmental Body applicable to TIAI.
5.4 Ownership of TIAI Shares. The delivery of certificates to
ALRI provided in Section 2.2 and the payment to TIAI provided in
Section 2.3 will result in ALRI's immediate acquisition of record
and beneficial ownership of the TIAI Shares, free and clear of all
Encumbrances subject to applicable State and Federal securities
laws. There are no outstanding options, rights, conversion rights,
agreements or commitments of any kind relating to the issuance, sale
or transfer of any Equity Securities or other securities of
Tangible Investments of America, Inc.
5.5 No Conflict as to TIAI and Subsidiaries. Neither the
execution and delivery of this Agreement nor the consummation of the
sale of the TIAI Shares to ALRI will (a) violate any provision of
the certificate of incorporation or by-laws (or other governing
instrument) of TIAI or any of its Subsidiaries or (b) violate, or
be in conflict with, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the
performance required by, or excuse performance by any Person of any
of its obligations under, or cause the acceleration of the maturity
of any debt or obligation pursuant to, or result in the creation or
imposition of any Encumbrance upon any property or assets of TIAI
or any of its Subsidiaries under, any material agreement or
commitment to which TIAI or any of its Subsidiaries is a party or by
which any of their respective property or assets is bound, or to
which any of the property or assets of TIAI or any of its
Subsidiaries is subject, or (c) violate any statute or law or any
judgment, decree, order, regulation or rule of any court or other
Governmental Body applicable to TIAI or any of its Subsidiaries
except, in the case of violations, conflicts, defaults,
terminations, accelerations or Encumbrances described in clause (b)
of this Section 5.5, for such matters which are not likely to have a
material adverse effect on the business or financial condition of
TIAI and its
Subsidiaries, taken as a whole.
5.6 Consents and Approvals of Governmental Authorities. Except
with respect to applicable State and Federal securities laws, no
consent, approval or authorization of, or declaration, filing or
registration with, any Governmental Body is required to be made or
obtained by TIAI or ALRI or any of its Subsidiaries in connection
with the execution, delivery and performance of this Agreement by
TIAI or the consummation of the sale of the TIAI Shares to ALRI.
5.7 Other Consents. No consent of any Person is required to be
obtained by TIAI or ALRI to the execution, delivery and performance
of this Agreement or the consummation of the sale of the TIAI Shares
to ALRI, including, but not limited to, consents from parties to
leases or other agreements or commitments, except for any consent
which the failure to obtain would not be likely to have a material
adverse effect on the business and financial condition of TIAI or ALRI.
5.8 Financial Statements. TIAI has delivered to ALRI
consolidated balance sheets of TIAI and its Subsidiaries as at
December 31, 1998, and statements of income and changes in financial
position for each of the years in the two-year period then ended,
together with the report thereon of TIAI's independent accountant
(the "TIAI Financial Statements"). Such TIAI Financial Statements
and notes fairly present the consolidated financial condition and
results of operations of TIAI and its Subsidiaries as at the
respective dates thereof and for the periods therein referred to,
all in accordance with generally accepted United States accounting
principles consistently applied throughout the periods involved,
except as set forth in the notes thereto.
5.9 Title to Properties. Either TIAI or one of its
Subsidiaries owns all the material properties and assets that they
purport to own (real, personal and mixed, tangible and intangible),
including, without limitation, all the material properties and
assets reflected in the TIAI Financial Statements (except for
property sold since the date of the TIAI Financial Statements in the
ordinary course of business or leased under capitalized leases), and
all the material properties and assets purchased or otherwise
acquired by TIAI or any of its Subsidiaries since the date of the
TIAI Financial Statements. All properties and assets reflected in
the TIAI Financial Statements are free and clear of all material
Encumbrances and are not, in the case of real property, subject to
any material rights of way, building use restrictions, exceptions,
variances, reservations or limitations of any nature whatsoever
except, with respect to all such properties and assets, (a)
mortgages or security interests shown on the TIAI Financial
Statements as securing specified liabilities or obligations, with
respect to
which no default (or event which, with notice or lapse of
time or both, would constitute a default) exists, and all of which
are listed in the TIAI Disclosure Letter, (b) mortgages or security
interests incurred in connection with the purchase of property or
assets after the date of the TIAI Financial Statements (such
mortgages and security interests being limited to the property or
assets so acquired), with respect to which no default (or event
which, with notice or lapse of time or both, would constitute a
default) exists, (c) as to real property, (i) imperfections of
title, if any, none of which materially detracts from the value or
impairs the use of the property subject thereto, or impairs the
operations of TIAI or any of its Subsidiaries and (ii) zoning laws
that do not impair the present or anticipated use of the property
subject thereto, and (d) liens for current taxes not yet due. The
properties and assets of TIAI and its Subsidiaries include all
rights, properties and other assets necessary to permit TIAI and
its Subsidiaries to conduct TIAI's business in all material
respects in the same manner as it is conducted on the date of this
Agreement.
5.10 Buildings, Plants and Equipment. The buildings, plants,
structures and material items of equipment and other personal
property owned or leased by TIAI or its Subsidiaries are, in all
respects material to the business or financial condition of TIAI
and its Subsidiaries, taken as a whole, in good operating condition
and repair (ordinary wear and tear excepted) and are adequate in all
such respects for the purposes for which they are being used. TIAI
has not received notification that it or any of its Subsidiaries is
in violation of any applicable building, zoning, anti-pollution,
health, safety or other law, ordinance or regulation in respect of
its buildings, plants or structures or their operations, which
violation is likely to have a material adverse effect on the
business or financial condition of TIAI and its Subsidiaries, taken
as a whole or which would require a payment by TIAI or ALRI or any
of their subsidiaries in excess of $2,000 in the aggregate, and
which has not been cured.
5.11 No Condemnation or Expropriation. Neither the whole nor
any portion of the property or leaseholds owned or held by TIAI or
any of its Subsidiaries is subject to any governmental decree or
order to be sold or is being condemned, expropriated or otherwise
taken by any Governmental Body or other Person with or without
payment of compensation therefor, which action is likely to have a
material adverse effect on the business or financial condition of
ALRI and its Subsidiaries, taken as a whole.
5.12 Litigation. There is no action, suit, inquiry, proceeding
or investigation by or before any court or Governmental Body pending
or threatened in writing against or involving TIAI or any of its
Subsidiaries which is
likely to have a material adverse effect on
the business or financial condition of TIAI, ALRI and any of their
Subsidiaries, taken as whole, or which would require a payment by
TIAI or its subsidiaries in excess of $2,000 in the aggregate or
which questions or challenges the validity of this Agreement.
Neither TIAI nor any or its Subsidiaries is subject to any
judgment, order or decree that is likely to have a material adverse
effect on the business or financial condition of TIAI, ALRI or any
of their Subsidiaries, taken as a whole, or which would require a
payment by TIAI or its subsidiaries in excess of $2,000 in the
aggregate.
5.13 Absence of Certain Changes. Except as set forth in Section
5.13 of the TIAI Disclosure Letter, since the date of the TIAI
Financial Statements, neither TIAI nor any of its Subsidiaries has:
a. suffered the damage or destruction of any of its
properties or assets (whether or not covered by insurance) which is
materially adverse to the business or financial condition of TIAI
and its Subsidiaries, taken as a whole, or made any disposition of
any of its material properties or assets other than in the ordinary
course of business;
b. made any change or amendment in its certificate of
incorporation or by-laws, or other governing instruments;
c. issued or sold any Equity Securities or other
securities, acquired, directly or indirectly, by redemption or
otherwise, any such Equity Securities, reclassified, split-up or
otherwise changed any such Equity Security, or granted or entered
into any options, warrants, calls or commitments of any kind with
respect thereto;
d. organized any new Subsidiary or acquired any Equity
Securities of any Person or any equity or ownership interest in any
business;
e. borrowed any funds or incurred, or assumed or become
subject to, whether directly or by way of guarantee or otherwise,
any obligation or liability with respect to any such indebtedness
for borrowed money;
f. paid, discharged or satisfied any material claim,
liability or obligation (absolute, accrued, contingent or
otherwise), other than in the ordinary course of business;
g. prepaid any material obligation having a maturity of
more than 90 days from the date such obligation was issued or
incurred;
h. canceled any material debts or waived any material
claims or rights, except in the ordinary course of business;
i. disposed of or permitted to lapse any rights to the
use of any material patent or registered trademark or copyright or
other intellectual property owned or used by it;
j. granted any general increase in the compensation of
officers or employees (including any such increase pursuant to any
employee benefit plan);
k. purchased or entered into any contract or commitment
to purchase any material quantity of raw materials or supplies, or
sold or entered into any contract or commitment to sell any material
quantity of property or assets, except (i) normal contracts or
commitments for the purchase of, and normal purchases of, raw
materials or supplies, made in the ordinary course business, (ii)
normal contracts or commitments for the sale of, and normal sales
of, inventory in the ordinary course of business, and (iii) other
contracts, commitments, purchases or sales in the ordinary course of
business;
l. made any capital expenditures or additions to
property, plant or equipment or acquired any other property or
assets (other than raw materials and supplies) at a cost in excess
of $25,000 in the aggregate;
m. written off or been required to write off any notes
or accounts receivable in an aggregate amount in excess of $2,000;
n. written down or been required to write down any
inventory in an aggregate amount in excess of $ 2,000;
o. entered into any collective bargaining or union
contract or agreement; or
p. other than the ordinary course of business, incurred
any liability required by generally accepted accounting principles
to be reflected on a balance sheet and material to the business or
financial condition of TIAI and its subsidiaries taken as a whole.
5.14 No Material Adverse Change. Since the date of the TIAI
Financial Statements, there has not been any material adverse change
in the business or financial condition of TIAI and its Subsidiaries
taken as a whole, other than changes resulting from economic
conditions prevailing in the United States precious coins,
collectibles and metals industry.
5.15 Contracts and Commitments. Except as set forth in Section
5.15 of the TIAI Disclosure Letter, neither TIAI nor any of its
Subsidiaries is a party to any:
a. Ccontract or agreement (other than purchase or sales
orders entered into in the ordinary course of business) involving
any liability on the part of TIAI or one of its Subsidiaries of
more than $25,000 and not cancelable by TIAI or the relevant
Subsidiary (without liability to TIAI or such Subsidiary) within 60
days;
b. Except with respect to the lease on its business
location, lease of personal property involving annual rental
payments in excess of $25,000 and not cancelable by TIAI or the
relevant Subsidiary (without liability to TIAI or such Subsidiary)
within 90 days;
c. Except with respect to the options referenced above,
Employee bonus, stock option or stock purchase, performance unit,
profit-sharing, pension, savings, retirement, health, deferred or
incentive compensation, insurance or other material employee benefit
plan (as defined in Section 2(3) of ERISA) or program for any of the
employees, former employees or retired employees of TIAI or any of
its Subsidiaries;
d. Commitment, contract or agreement that is currently
expected by the management of TIAI to result in any material loss
upon completion or performance thereof;
e. Contract, agreement or commitment that is material to
the business of TIAI and its Subsidiaries, taken as a whole, with
any officer, employee, agent, consultant, advisor, salesman, sales
representative, value added reseller, distributor or dealer; or
f. Employment agreement or other similar agreement that
contains any severance or termination pay, liabilities or
obligations.
All such contracts and agreements are in full force and effect.
Neither TIAI nor any or its Subsidiaries is in breach of, in
violation of or in default under, any agreement, instrument,
indenture, deed of trust, commitment, contract or other obligation
of any type to which TIAI or any of its Subsidiaries is a party or
is
or may be bound that relates to the business of TIAI or any of
its Subsidiaries or to which any of the assets or properties of TIAI
or any of its Subsidiaries is subject, the effect of which breach,
violation or default is likely to materially and adversely affect
the business or financial condition of TIAI and its Subsidiaries,
taken as a whole. ALRI has not guaranteed or assumed and
specifically does not guarantee or assume any obligations of TIAI
or any of its Subsidiaries.
5.16 Labor Relations. Neither TIAI nor any of its Subsidiaries
is a party to any collective bargaining agreement. Except for any
matter which is not likely to have a material adverse effect on the
business or financial condition of TIAI and its Subsidiaries, taken
as a whole, (a) TIAI and each of its Subsidiaries is in compliance
with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours,
and is not engaged in any unfair labor practice, (b) there is no
unfair labor practice complaint against TIAI or any of its
Subsidiaries pending before the National Labor Relations Board, (c)
there is no labor strike, dispute, slowdown or stoppage actually
pending or threatened against TIAI or any of its Subsidiaries, (d)
no representation question exists respecting the employees of TIAI
or any of its Subsidiaries, (e) neither TIAI nor any of its
Subsidiaries has experienced any strike, work stoppage or other
labor difficulty, and (f) no collective bargaining agreement
relating to employees of TIAI or any of its Subsidiaries is
currently being negotiated.
5.17 Employee Benefit Plans. Section 5.16 of the TIAI
Disclosure Letter contains a list of all material employee pension
and welfare benefit plans covering employees of TIAI and its
Subsidiaries. No listed plan is (1) a multi-employer plan as defined
in Section 3(37) of ERISA, or (2) a defined benefit plan as defined
in Section 3(35) of ERISA, any listed individual account pension
plan is duly qualified as tax exempt under the applicable sections
of the Code, each listed benefit plan and related funding
arrangement, if any, has been maintained in all material respects in
compliance with its terms and the provisions of ERISA and the Code,
and the TIAI Disclosure Letter also lists all material management
incentive plans and all material employment contracts or severance
arrangements pertaining to one or more specific employees.
5.18 Compliance with Law. The operations of TIAI and its
Subsidiaries have been conducted in accordance with all applicable
laws and regulations of all Governmental Bodies having jurisdiction
over them, except for violations thereof which are not likely to
have a material adverse effect on the business or financial
condition of TIAI and its Subsidiaries, taken as a whole, or which
would not require a payment by TIAI or its Subsidiaries in excess
of $2,000 in the aggregate, or which have been cured. Neither
TIAI nor any of its Subsidiaries has received any notification of any
asserted present or past failure by it to comply with any such
applicable laws or regulations. TIAI and its Subsidiaries have all
material licenses, permits, orders or approvals from the
Governmental Bodies required for the conduct of their businesses,
and are not in material violation of any such licenses, permits,
orders and approvals. All such licenses, permits, orders and
approvals are in full force and effect, and no suspension or
cancellation of any thereof has been threatened.
5.19 Tax Matters.
a. TIAI and each of its Subsidiaries (1) (except with
respect to its 1998 tax return, as to which an extension has been
appropriately filed) has filed all nonconsolidated and noncombined
Tax Returns and all consolidated or combined Tax Returns that
include only TIAI and/or its Subsidiaries and not Seller or its
other Affiliates (for the purposes of this Section 5.18, such tax
Returns shall be considered nonconsolidated and noncombined Tax
Returns) required to be filed through the date hereof and has paid
any Tax due through the date hereof with respect to the time periods
covered by such nonconsolidated and noncombined Tax Returns and
shall timely pay any such Taxes required to be paid by it after the
date hereof with respect to such Tax Returns and (2) shall prepare
and timely file all such nonconsolidated and noncombined Tax Returns
required to be filed after the date hereof and through the Closing
Date and pay all Taxes required to be paid by it with respect to the
periods covered by such Tax Returns; (B) all such Tax Returns filed
pursuant to clause (A) after the date hereof shall, in each case, be
prepared and filed in a manner consistent in all material respects
(including elections and accounting methods and conventions) with
such Tax Return most recently filed in the relevant jurisdiction
prior to the date hereof, except as otherwise required by law or
regulation. Any such Tax Return filed or required to be filed after
the date hereof shall not reflect any new elections or the adoption
of any new accounting methods or conventions or other similar items,
except to the extent such particular reflection or adoption is
required to comply with any law or regulation.
b. All consolidated or combined Tax Returns (except
those described in subparagraph (a) above) required to be filed by
any person through the date hereof that are required or permitted to
include the income, or reflect the activities, operations and
transactions, of TIAI or any of its Subsidiaries for any taxable
period have been timely filed, and the income, activities,
operations and transactions
of TIAI and Subsidiaries have been
properly included and reflected thereon. TIAI shall prepare and
file, or cause to be prepared and filed, all such consolidated or
combined Tax Returns that are required or permitted to include the
income, or reflect the activities, operations and transactions, of
TIAI or any Subsidiary, with respect to any taxable year or the
portion thereof ending on or prior to the Closing Date, including,
without limitation, TIAI's consolidated federal income tax return
for such taxable years. TIAI will timely file a consolidated federal
income tax return for the taxable year ended December 31, 1998 and
such return shall include and reflect the income, activities,
operations and transactions of TIAI and Subsidiaries for the
taxable period then ended, and hereby expressly covenants and agrees
to file a consolidated federal income tax return, and to include and
reflect thereon the income, activities, operations and transactions
of TIAI and Subsidiaries for the taxable period through the Closing
Date. All Tax Returns filed pursuant to this subparagraph (b) after
the date hereof shall, in each case, to the extent that such Tax
Returns specifically relate to TIAI or any of its Subsidiaries and
do not generally relate to matters affecting other members of TIAI's
consolidated group, be prepared and filed in a manner consistent in
all material respects (including elections and accounting methods
and conventions) with the Tax Return most recently filed in the
relevant jurisdictions prior to the date hereof, except as otherwise
required by law or regulation. TIAI has paid or will pay all Taxes
that may now or hereafter be due with respect to the taxable periods
covered by such consolidated or combined Tax Returns.
c. Neither TIAI nor any of its Subsidiaries has agreed,
or is required, to make any adjustment (x) under Section 481(a) of
the Code by reason of a change in accounting method or otherwise or
(y) pursuant to any provision of the Tax Reform Act of 1986, the
Revenue Act of 1987 or the Technical and Miscellaneous Revenue Act
of 1988.
d. Neither TIAI nor any of its Subsidiaries or any
predecessor or Affiliate of the foregoing has, at any time, filed a
consent under Section 341(f)(1) of the Code, or agreed under Section
341(f)(3) of the Code, to have the provisions of Section 341(f)(2)
of the Code apply to any sale of its stock.
e. There is no (nor has there been any request for an)
agreement, waiver or consent providing for an extension of time with
respect to the assessment of any Taxes attributable to TIAI or its
Subsidiaries, or their assets or operations and no power of attorney
granted by TIAI or any of its Subsidiaries with respect to any Tax
matter is currently in force.
f. There is no action, suit, proceeding, investigation,
audit, claim, demand, deficiency or additional assessment in
progress, pending or threatened against or with respect to any Tax
attributable to TIAI, its Subsidiaries or their assets or operations.
g. Except as set forth in the TIAI Disclosure Letter,
all amounts required to be withheld as of the Closing Date for Taxes
or otherwise have been withheld and paid when due to the appropriate
agency or authority.
h. No property of TIAI is "tax-exempt use property "
within the meaning of Section 168(h) of the Code nor property that
TIAI and/or its Subsidiaries will be required to treat as being
owned by another person pursuant to Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately
prior to the enactment of the Tax Reform Act of 1986.
i. There have been delivered or made available to ALRI
true and complete copies of all income Tax Returns (or with respect
to consolidated or combined returns, the portion thereof) and any
other Tax Returns requested by ALRI as may be relevant to TIAI, its
Subsidiaries, or their assets or operations for any and all periods
ending after December 31, 1998, or for any Tax years which are
subject to audit or investigation by any taxing authority or entity.
j. There is no contract, agreement, plan or arrangement,
including but not limited to the provisions of this Agreement,
covering any employee or former employee of TIAI or its Subsidiaries
that, individually or collectively, could give rise to the payment
of any amount that would not be deductible pursuant to Section 280G
or 162 of the Code.
5.20 Environmental Matters.
a. At all times prior to the date hereof, TIAI and its
Subsidiaries have complied in all material respects with applicable
environmental laws, orders, regulations, rules and ordinances
relating to the Properties (as hereinafter defined), the violation
of which would have a material adverse effect on the business or
financial condition of TIAI and its Subsidiaries, taken as a whole,
or which would require a payment by TIAI or its Subsidiaries in
excess of
$2,000 in the aggregate, and which have been duly
adopted, imposed or promulgated by any legislative, executive,
administrative or judicial body or officer of any Governmental Body.
b. The environmental licenses, permits and
authorizations that are material to the operations of TIAI and its
Subsidiaries, taken as a whole, are in full force and effect.
c. Neither TIAI nor any of its Subsidiaries has
released or caused to be released on or about the properties
currently owned or leased by TIAI or any of its Subsidiaries (the
"Properties") any (i) pollutants, (ii) contaminants, (iii)
"Hazardous Substances," as that term is defined in Section 101(14)
of the Comprehensive Environmental Response Act, as amended or (iv)
"Regulated Substances," as that term in defined in Section 9001 of
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901,
et seq., as amended, which would be required to be remediated by any
governmental agency with jurisdiction over the Properties under the
authority of laws, regulations and ordinances as in effect and
currently interpreted on the date hereof, which remediation would
have a material adverse effect on the business or financial
condition of TIAI and its Subsidiaries, taken as a whole.
5.21 Brokers or Finders. TIAI has not employed any broker or
finder or incurred any liability for any brokerage or finder's fees
or commissions or similar payments in connection with the sale of
the TIAI Shares to ALRI.
5.22 Absence of Certain Commercial Practices. Neither TIAI nor
any of its Subsidiaries has, directly or indirectly, paid or
delivered any fee, commission or other sum of money or item of
property, however characterized, to any finder, agent, government
official or other party, in the United States or any other country,
which is in any manner related to the business or operations of
TIAI or its Subsidiaries, which TIAI or one of its Subsidiaries
knows or has reason to believe to have been illegal under any
federal, state or local laws of the United States or any other
country having jurisdiction; and neither TIAI nor any of its
Subsidiaries has participated, directly or indirectly, in any
boycotts or other similar practices affecting any of its actual or
potential customers in violation of any applicable law or regulation.
5.23 Transactions with Directors and Officers. Except as set
forth in Section 5.23 of the TIAI Disclosure Letter, TIAI and its
Subsidiaries do not engage in business with any Person in which any
of TIAI's directors or officers has a material equity interest. No
director or officer of TIAI owns any
property, asset or right which
is material to the business of TIAI and its Subsidiaries, taken as a
whole.
5.24 Borrowing and Guarantees. Except as set forth in Section
5.24 of the TIAI Disclosure Letter, TIAI and its Subsidiaries (a) do
not have any indebtedness for borrowed money, (b) are not lending or
committed to lend any money (except for advances to employees in the
ordinary course of business), and (c) are not guarantors or sureties
with respect to the obligations of any Person.
6. Representations and Warranties of ALRI.
ALRI represents and warrants to TIAI that, to the Knowledge of ALRI
(which limitation shall not apply to Section 6.3), and except as set
forth in the ALRI Disclosure Letter:
6.1 Organization of TIAI; Authorization. ALRI is a
corporation duly organized, validly existing and in good standing
under the laws of Nevada with full corporate power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action of ALRI
and this Agreement constitutes a valid and binding obligation of
ALRI; enforceable against it in accordance with its terms.
6.2 Capitalization. The authorized capital stock of ALRI
consists of 50,000,000 shares of common stock, par value $.001 per
share, and no shares of preferred stock. As of the date of this
Agreement, ALRI has 6,000,000 shares of common stock issued and
outstanding. Prior to the Closing, ALRI will (i) amend its Articles
of Incorporation to authorize up to 10,000,000 shares of preferred
stock (the "Amendment"), par value $.001 per share; (ii) cause the
cancellation of 2,700,000 shares of "restricted" common stock held
by affiliates of ALRI (the "Cancellation"); and (iii) subsequently
complete a one for two reverse stock split of its issued and
outstanding shares (the "Reverse Split"). Upon completion of the
Amendment, the Cancellation and Reverse Split, (a) the authorized
capital stock of ALRI will consist of 50,000,000 shares of common
stock, par value $.001 per share and 10,000,000 shares of preferred
stock, par value $.001 per share; and (b) an aggregate of 1,650,000
common shares of ALRI will be issued and outstanding, of which
1,500,000 will be "free trade" shares. No shares have otherwise
been registered under state or federal securities laws. As of the
Closing Date, all of the issued and outstanding shares of common
stock of ALRI are validly issued, fully paid and non-assessable and
they are not and as of the Closing Date there will not be
outstanding any other warrants, options or other agreements on the
part of ALRI obligating ALRI to issue any additional shares of
common or preferred stock or any of its securities of any kind.
ALRI will not issue any shares of capital stock from the date of
this Agreement through the Closing Date.
6.3 No Conflict as to TAIA. Neither the execution and delivery
of this Agreement nor the consummation of the sale of the ALRI
Shares to TIAI will (a) violate any provision of the certificate of
incorporation or by-laws of ALRI, or (b) violate, be in conflict
with, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under any
agreement to which ALRI is a party or (c) violate any statute or law
or any judgment, decree, order, regulation or rule of any court or
other Governmental Body applicable to ALRI.
6.4 Ownership of ALRI Shares. The delivery of certificates to
TIAI provided in Section 2.3 will result in the Shareholders' of
TIAI immediate acquisition of record and beneficial ownership of the
ALRI Shares, free and clear of all Encumbrances other than as
required by Federal and State securities laws. There are no
outstanding options, rights, conversion rights, agreements or
commitments of any kind relating to the issuance, sale or transfer
of any Equity Securities or other securities of ALRI.
6.5 No Conflict as to ALRI and Subsidiaries. Neither the
execution and delivery of this Agreement nor the consummation of the
sale of the ALRI Shares to TIAI will (a) violate any provision of
the certificate of incorporation or by-laws (or other governing
instrument) of ALRI or any of its Subsidiaries or (b) violate, or
be in conflict with, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the
performance required by, or excuse performance by any Person of any
of its obligations under, or cause the acceleration of the maturity
of any debt or obligation pursuant to, or result in the creation or
imposition of any Encumbrance upon any property or assets of ALRI
or any of its Subsidiaries under, any material agreement or
commitment to which ALRI or any of its Subsidiaries is a party or by
which any of their respective property or assets is bound, or to
which any of the property or assets of ALRI or any of its
Subsidiaries is subject, or (c) violate any statute or law or any
judgment, decree, order, regulation or rule of any court or other
Governmental Body applicable to ALRI or any of its Subsidiaries
except, in the case of violations, conflicts, defaults,
terminations, accelerations or Encumbrances described in clause (b)
of this Section 6.5, for such matters which are not likely to have a
material adverse effect on the business or financial condition of
ALRI and its Subsidiaries, taken as a whole.
6.6 Consents and Approvals of Governmental Authorities. No
consent, approval or authorization of, or declaration, filing or
registration with, any Governmental Body is required to be made or
obtained by ALRI or TAIA or any of either of their Subsidiaries in
connection with the execution, delivery and performance of this
Agreement by ALRI or the consummation of the sale of the ALRI Shares
to TIAI.
6.7 Other Consents. No consent of any Person is required to be
obtained by TIAI or ALRI to the execution, delivery and performance
of this Agreement or the consummation of the sale of the ALRI Shares
to TIAI, including, but not limited to, consents from parties to
leases or other agreements or commitments, except for any consent
which the failure to obtain would not be likely to have a material
adverse effect on the business and financial condition of TIAI or ALRI.
6.8 Financial Statements. ALRI has delivered to TIAI
consolidated balance sheets of ALRI and its Subsidiaries as at
December 31, 1997 and December 31, 1998, and statements of income
and changes in financial position for each of the years in the
two-year period then ended, together with the report thereon of
ALRI's independent accountant (the "ALRI Financial Statements").
Such ALRI Financial Statements and notes fairly present the
consolidated financial condition and results of operations of ALRI
and its Subsidiaries as at the respective dates thereof and for the
periods therein referred to, all in accordance with generally
accepted United States accounting principles consistently applied
throughout the periods involved, except as set forth in the notes
thereto.
6.9 Title to Properties. Either ALRI or one of its
Subsidiaries owns all the material properties and assets that they
purport to own (real, personal and mixed, tangible and intangible),
including, without limitation, all the material properties and
assets reflected in the ALRI Financial Statements and all the
material properties and assets purchased or otherwise acquired by
ALRI or any of its Subsidiaries since the date of the ALRI Financial
Statements. All properties and assets reflected in the ALRI
Financial Statements are free and clear of all material Encumbrances
and are not, in the case of real property, subject to any material
rights of way, building use restrictions, exceptions, variances,
reservations or limitations of any nature whatsoever except, with
respect to all such properties and assets, (a) mortgages or security
interests shown on the ALRI Financial Statements as securing
specified liabilities or obligations, with respect to which no
default (or event which, with notice or lapse of time or both, would
constitute a default) exists, and all of which are listed in the
ALRI Disclosure Letter, (b) mortgages or security interests incurred
in connection with the purchase of property or assets after the date
of the
ALRI Financial Statements (such mortgages and security
interests being limited to the property or assets so acquired), with
respect to which no default (or event which, with notice or lapse of
time or both, would constitute a default) exists, (c) as to real
property, (i) imperfections of title, if any, none of which
materially detracts from the value or impairs the use of the
property subject thereto, or impairs the operations of ALRI or any
of its Subsidiaries and (ii) zoning laws that do not impair the
present or anticipated use of the property subject thereto, and (d)
liens for current taxes not yet due. The properties and assets of
ALRI and its Subsidiaries include all rights, properties and other
assets necessary to permit ALRI and its Subsidiaries to conduct
ALRI's business in all material respects in the same manner as it is
conducted on the date of this Agreement.
6.10 Buildings, Plants and Equipment. The buildings, plants,
structures and material items of equipment and other personal
property owned or leased by ALRI or its Subsidiaries are, in all
respects material to the business or financial condition of ALRI
and its Subsidiaries, taken as a whole, in good operating condition
and repair (ordinary wear and tear excepted) and are adequate in all
such respects for the purposes for which they are being used. ALRI
has not received notification that it or any of its Subsidiaries is
in violation of any applicable building, zoning, anti-pollution,
health, safety or other law, ordinance or regulation in respect of
its buildings, plants or structures or their operations, which
violation is likely to have a material adverse effect on the
business or financial condition of ALRI and its Subsidiaries, taken
as a whole or which would require a payment by TIAI or ALRI or any
of their subsidiaries in excess of $2,000 in the aggregate, and
which has not been cured.
6.11 No Condemnation or Expropriation. Neither the whole nor
any portion of the property or leaseholds owned or held by ALRI or
any of its Subsidiaries is subject to any governmental decree or
order to be sold or is being condemned, expropriated or otherwise
taken by any Governmental Body or other Person with or without
payment of compensation therefor, which action is likely to have a
material adverse effect on the business or financial condition of
TIAI and its Subsidiaries, taken as a whole.
6.12 Litigation. There is no action, suit, inquiry, proceeding
or investigation by or before any court or Governmental Body pending
or threatened in writing against or involving ALRI or any of its
Subsidiaries which is likely to have a material adverse effect on
the business or financial condition of TIAI, ALRI and any of their
Subsidiaries, taken as whole, or which would require a payment by
ALRI or its subsidiaries in excess of $2,000 in the aggregate or
which questions or challenges the validity of this Agreement.
Neither ALRI nor any or its Subsidiaries is subject to any
judgment, order or decree that is likely to have a material adverse
effect on
the business or financial condition of TIAI, ALRI or any
of their Subsidiaries, taken as a whole, or which would require a
payment by ALRI or its subsidiaries in excess of $2,000 in the
aggregate.
6.13 Absence of Certain Changes. Since the date of the ALRI
Financial Statements, neither ALRI nor any of its Subsidiaries has:
a. suffered the damage or destruction of any of its
properties or assets (whether or not covered by insurance) which is
materially adverse to the business or financial condition of ALRI
and its Subsidiaries, taken as a whole, or made any disposition of
any of its material properties or assets other than in the ordinary
course of business;
b. made any change or amendment in its certificate of
incorporation or by-laws, or other governing instruments;
c. issued or sold any Equity Securities or other
securities, acquired, directly or indirectly, by redemption or
otherwise, any such Equity Securities, reclassified, split-up or
otherwise changed any such Equity Security, or granted or entered
into any options, warrants, calls or commitments of any kind with
respect thereto;
d. organized any new Subsidiary or acquired any Equity
Securities of any Person or any equity or ownership interest in any
business;
e. borrowed any funds or incurred, or assumed or become
subject to, whether directly or by way of guarantee or otherwise,
any obligation or liability with respect to any such indebtedness
for borrowed money;
f. paid, discharged or satisfied any material claim,
liability or obligation (absolute, accrued, contingent or
otherwise), other than in the ordinary course of business;
g. prepaid any material obligation having a maturity of
more than 90 days from the date such obligation was issued or
incurred;
h. canceled any material debts or waived any material
claims or rights, except in the ordinary course of business;
i. disposed of or permitted to lapse any rights to the
use of any material patent or registered trademark or copyright or
other intellectual property owned or used by it;
j. granted any general increase in the compensation of
officers or employees (including any such increase pursuant to any
employee benefit plan);
k. purchased or entered into any contract or commitment
to purchase any material quantity of raw materials or supplies, or
sold or entered into any contract or commitment to sell any material
quantity of property or assets, except (i) normal contracts or
commitments for the purchase of, and normal purchases of, raw
materials or supplies, made in the ordinary course business, (ii)
normal contracts or commitments for the sale of, and normal sales
of, inventory in the ordinary course of business, and (iii) other
contracts, commitments, purchases or sales in the ordinary course of
business;
l. made any capital expenditures or additions to
property, plant or equipment or acquired any other property or
assets (other than raw materials and supplies) at a cost in excess
of $2,000 in the aggregate;
m. written off or been required to write off any notes
or accounts receivable in an aggregate amount in excess of $2,000;
n. written down or been required to write down any
inventory in an aggregate amount in excess of $ 2,000;
o. entered into any collective bargaining or union
contract or agreement; or
p. other than the ordinary course of business, incurred
any liability required by generally accepted accounting principles
to be reflected on a balance sheet and material to the business or
financial condition of ALRI and its subsidiaries taken as a whole.
6.14 No Material Adverse Change. Since the date of the ALRI
Financial Statements, there has not been any material adverse change
in the business or financial condition of ALRI and its Subsidiaries
taken as a whole, other than changes resulting from economic
conditions prevailing in the United States precious coins,
collectibles and metals industry.
6.15 Contracts and Commitments. Neither ALRI nor any of its
Subsidiaries is a party to any:
a. Contract or agreement (other than purchase or sales
orders entered into in the ordinary course of business) involving
any liability on the part of ALRI or one of its Subsidiaries of
more than $2,000 and not cancelable by ALRI or the relevant
Subsidiary (without liability to ALRI or such Subsidiary) within 60
days;
b. Lease of personal property involving annual rental
payments in excess of $2,000 and not cancelable by ALRI or the
relevant Subsidiary (without liability to ALRI or such Subsidiary)
within 90 days;
c. Employee bonus, stock option or stock purchase,
performance unit, profit-sharing, pension, savings, retirement,
health, deferred or incentive compensation, insurance or other
material employee benefit plan (as defined in Section 2(3) of ERISA)
or program for any of the employees, former employees or retired
employees of ALRI or any of its Subsidiaries;
d. Commitment, contract or agreement that is currently
expected by the management of ALRI to result in any material loss
upon completion or performance thereof;
e. Contract, agreement or commitment that is material to
the business of ALRI and its Subsidiaries, taken as a whole, with
any officer, employee, agent, consultant, advisor, salesman, sales
representative, value added reseller, distributor or dealer; or
f. Employment agreement or other similar agreement that
contains any severance or termination pay, liabilities or
obligations.
All such contracts and agreements are in full force and effect.
Neither ALRI nor any or its Subsidiaries is in breach of, in
violation of or in default under, any agreement, instrument,
indenture, deed of trust, commitment, contract or other obligation
of any type to which ALRI or any of its Subsidiaries is a party or
is or may be bound that relates to the business of ALRI or any of
its Subsidiaries or to which any of the assets or properties of ALRI
or any of its Subsidiaries is subject, the effect of which breach,
violation or default is likely to materially and adversely affect
the business or financial condition of ALRI and its Subsidiaries,
taken as a whole.
6.16 Labor Relations. Neither ALRI nor any of its Subsidiaries
is a party to any collective bargaining agreement. Except for any
matter which is not likely to have a material adverse effect on the
business or financial condition of ALRI and its Subsidiaries, taken
as a whole, (a) ALRI and each of its Subsidiaries is in compliance
with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours,
and is not engaged in any unfair labor practice, (b) there is no
unfair labor practice complaint against ALRI or any of its
Subsidiaries pending before the National Labor Relations Board, (c)
there is no labor strike, dispute, slowdown or stoppage actually
pending or threatened against ALRI or any of its Subsidiaries, (d)
no representation question exists respecting the employees of ALRI
or any of its Subsidiaries, (e) neither ALRI nor any of its
Subsidiaries has experienced any strike, work stoppage or other
labor difficulty, and (f) no collective bargaining agreement
relating to employees of ALRI or any of its Subsidiaries is
currently being negotiated.
6.17 Employee Benefit Plans. Section 6.16 of the ALRI
Disclosure Letter contains a list of all material employee pension
and welfare benefit plans covering employees of ALRI and its
Subsidiaries. No listed plan is (1) a multi-employer plan as defined
in Section 3(37) of ERISA, or (2) a defined benefit plan as defined
in Section 3(35) of ERISA, any listed individual account pension
plan is duly qualified as tax exempt under the applicable sections
of the Code, each listed benefit plan and related funding
arrangement, if any, has been maintained in all material respects in
compliance with its terms and the provisions of ERISA and the Code,
and the ALRI Disclosure Letter also lists all material management
incentive plans and all material employment contracts or severance
arrangements pertaining to one or more specific employees.
6.18 Compliance with Law. The operations of ALRI and its
Subsidiaries have been conducted in accordance with all applicable
laws and regulations of all Governmental Bodies having jurisdiction
over them, except for violations thereof which are not likely to
have a material adverse effect on the business or financial
condition of ALRI and its Subsidiaries, taken as a whole, or which
would not require a payment by ALRI or its Subsidiaries in excess of
$2,000 in the aggregate, or which have been cured. Neither ALRI nor
any of its Subsidiaries has received any notification of any
asserted present or past failure by it to comply with any such
applicable laws or regulations. ALRI and its Subsidiaries have all
material licenses, permits, orders or approvals from the
Governmental Bodies required for the conduct of their businesses,
and are not in material violation of any such licenses, permits,
orders and approvals. All such licenses, permits, orders and
approvals are in full force and effect, and no
suspension or cancellation of any thereof has been threatened.
6.19 Tax Matters.
a. ALRI and each of its Subsidiaries (1) has filed all
nonconsolidated and noncombined Tax Returns and all consolidated or
combined Tax Returns that include only ALRI and/or its Subsidiaries
and not Seller or its other Affiliates (for the purposes of this
Section 6.18, such tax Returns shall be considered nonconsolidated
and noncombined Tax Returns) required to be filed through the date
hereof and has paid any Tax due through the date hereof with respect
to the time periods covered by such nonconsolidated and noncombined
Tax Returns and shall timely pay any such Taxes required to be paid
by it after the date hereof with respect to such Tax Returns and (2)
shall prepare and timely file all such nonconsolidated and
noncombined Tax Returns required to be filed after the date hereof
and through the Closing Date and pay all Taxes required to be paid
by it with respect to the periods covered by such Tax Returns; (B)
all such Tax Returns filed pursuant to clause (A) after the date
hereof shall, in each case, be prepared and filed in a manner
consistent in all material respects (including elections and
accounting methods and conventions) with such Tax Return most
recently filed in the relevant jurisdiction prior to the date
hereof, except as otherwise required by law or regulation. Any such
Tax Return filed or required to be filed after the date hereof shall
not reflect any new elections or the adoption of any new accounting
methods or conventions or other similar items, except to the extent
such particular reflection or adoption is required to comply with
any law or regulation.
b. All consolidated or combined Tax Returns (except
those described in subparagraph (a) above) required to be filed by
any person through the date hereof that are required or permitted to
include the income, or reflect the activities, operations and
transactions, of ALRI or any of its Subsidiaries for any taxable
period have been timely filed, and the income, activities,
operations and transactions of ALRI and Subsidiaries have been
properly included and reflected thereon. ALRI shall prepare and
file, or cause to be prepared and filed, all such consolidated or
combined Tax Returns that are required or permitted to include the
income, or reflect the activities, operations and transactions, of
ALRI or any Subsidiary, with respect to any taxable year or the
portion thereof ending on or prior to the Closing Date, including,
without limitation, ALRI's consolidated federal income tax return
for such taxable years. ALRI will timely file a consolidated federal
income tax return for
the taxable year ended December 31, 1998 and
such return shall include and reflect the income, activities,
operations and transactions of ALRI and Subsidiaries for the taxable
period then ended, and hereby expressly covenants and agrees to file
a consolidated federal income tax return, and to include and reflect
thereon the income, activities, operations and transactions of ALRI
and Subsidiaries for the taxable period through the Closing Date.
All Tax Returns filed pursuant to this subparagraph (b) after the
date hereof shall, in each case, to the extent that such Tax Returns
specifically relate to ALRI or any of its Subsidiaries and do not
generally relate to matters affecting other members of ALRI's
consolidated group, be prepared and filed in a manner consistent in
all material respects (including elections and accounting methods
and conventions) with the Tax Return most recently filed in the
relevant jurisdictions prior to the date hereof, except as otherwise
required by law or regulation. ALRI has paid or will pay all Taxes
that may now or hereafter be due with respect to the taxable periods
covered by such consolidated or combined Tax Returns.
c. Neither ALRI nor any of its Subsidiaries has agreed,
or is required, to make any adjustment (x) under Section 481(a) of
the Code by reason of a change in accounting method or otherwise or
(y) pursuant to any provision of the Tax Reform Act of 1986, the
Revenue Act of 1987 or the Technical and Miscellaneous Revenue Act
of 1988.
d. Neither ALRI nor any of its Subsidiaries or any
predecessor or Affiliate of the foregoing has, at any time, filed a
consent under Section 341(f)(1) of the Code, or agreed under Section
341(f)(3) of the Code, to have the provisions of Section 341(f)(2)
of the Code apply to any sale of its stock.
e. There is no (nor has there been any request for an)
agreement, waiver or consent providing for an extension of time with
respect to the assessment of any Taxes attributable to ALRI or its
Subsidiaries, or their assets or operations and no power of attorney
granted by ALRI or any of its Subsidiaries with respect to any Tax
matter is currently in force.
f. There is no action, suit, proceeding, investigation,
audit, claim, demand, deficiency or additional assessment in
progress, pending or threatened against or with respect to any Tax
attributable to ALRI, its Subsidiaries or their assets or operations.
g. All amounts required to be withheld as of the Closing
Date for Taxes or otherwise have been withheld and paid when due to
the appropriate agency or authority.
h. No property of ALRI is "tax-exempt use property "
within the meaning of Section 168(h) of the Code nor property that
ALRI and/or its Subsidiaries will be required to treat as being
owned by another person pursuant to Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately
prior to the enactment of the Tax Reform Act of 1986.
i. There have been delivered or made available to TIAI
true and complete copies of all income Tax Returns (or with respect
to consolidated or combined returns, the portion thereof) and any
other Tax Returns requested by TIAI as may be relevant to ALRI, its
Subsidiaries, or their assets or operations for any and all periods
ending after December 31, 1998, or for any Tax years which are
subject to audit or investigation by any taxing authority or entity.
j. There is no contract, agreement, plan or arrangement,
including but not limited to the provisions of this Agreement,
covering any employee or former employee of ALRI or its Subsidiaries
that, individually or collectively, could give rise to the payment
of any amount that would not be deductible pursuant to Section 280G
or 162 of the Code.
6.20 Environmental Matters.
a. At all times prior to the date hereof, ALRI and its
Subsidiaries have complied in all material respects with applicable
environmental laws, orders, regulations, rules and ordinances
relating to the Properties (as hereinafter defined), the violation
of which would have a material adverse effect on the business or
financial condition of ALRI and its Subsidiaries, taken as a whole,
or which would require a payment by ALRI or its Subsidiaries in
excess of $2,000 in the aggregate, and which have been duly
adopted, imposed or promulgated by any legislative, executive,
administrative or judicial body or officer of any Governmental Body.
b. The environmental licenses, permits and
authorizations that are material to the operations of ALRI and its
Subsidiaries, taken as a whole, are in full force and effect.
c. Neither ALRI nor any of its Subsidiaries has
released or caused to be released on or about the properties
currently owned or leased by ALRI or any of its Subsidiaries (the
"Properties") any (i) pollutants, (ii) contaminants, (iii)
"Hazardous Substances," as that term is defined in Section 101(14)
of the Comprehensive Environmental Response Act, as amended or (iv)
"Regulated Substances," as that term in defined in Section 9001 of
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901,
et seq., as amended, which would be required to be remediated by any
governmental agency with jurisdiction over the Properties under the
authority of laws, regulations and ordinances as in effect and
currently interpreted on the date hereof, which remediation would
have a material adverse effect on the business or financial
condition of ALRI and its Subsidiaries, taken as a whole.
6.21 Brokers or Finders. ALRI has not employed any broker or
finder or incurred any liability for any brokerage or finder's fees
or commissions or similar payments in connection with the sale of
the ALRI Shares to TIAI.
6.22 Absence of Certain Commercial Practices. Neither ALRI nor
any of its Subsidiaries has, directly or indirectly, paid or
delivered any fee, commission or other sum of money or item of
property, however characterized, to any finder, agent, government
official or other party, in the United States or any other country,
which is in any manner related to the business or operations of
ALRI or its Subsidiaries, which ALRI or one of its Subsidiaries
knows or has reason to believe to have been illegal under any
federal, state or local laws of the United States or any other
country having jurisdiction; and neither ALRI nor any of its
Subsidiaries has participated, directly or indirectly, in any
boycotts or other similar practices affecting any of its actual or
potential customers in violation of any applicable law or regulation.
6.23 Transactions with Directors and Officers. ALRI and its
Subsidiaries do not engage in business with any Person in which any
of ALRI's directors or officers has a material equity interest. No
director or officer of ALRI owns any property, asset or right which
is material to the business of ALRI and its Subsidiaries, taken as a
whole.
6.24 Borrowing and Guarantees. ALRI and its Subsidiaries (a) do
not have any indebtedness for borrowed money, (b) are not lending or
committed to
lend any money (except for advances to employees in the
ordinary course of business), and (c) are not guarantors or sureties
with respect to the obligations of any Person.
6.25 Purchase for Investment. ALRI is purchasing the TIAI
Shares solely for its own account for the purpose of investment and
not with a view to, or for sale in connection with, any distribution
of any portion thereof in violation of any applicable securities
law.
7. Access and Reporting; Filings With Governmental Authorities;
Other Covenants.
7.1 Access Between the date of this Agreement and the Closing
Date. Each of TIAI and ALRI shall (a) give to the other and its
authorized representatives reasonable access to all plants, offices,
warehouse and other facilities and properties of TIAI or ALRI, as
the case may be, and to its books and records, (b) permit the other
to make inspections thereof, and (c) cause its officers and its
advisors to furnish the other with such financial and operating data
and other information with respect to the business and properties of
such party and its Subsidiaries and to discuss with such and its
authorized representatives its affairs and those of its
Subsidiaries, all as the other may from time to time reasonably
request.
7.3 Exclusivity. From the date hereof until the earlier of
the Closing or the termination of this Agreement, ALRI shall not
solicit or negotiate or enter into any agreement with any other
Person with respect to or in furtherance of any proposal for a
merger or business combination involving, or acquisition of any
interest in, or (except in the ordinary course of business) sale of
assets by, ALRI, except for the exchange of the ALRI Shares for the
TIAI Shares from TIAI's shareholders.
7.4 Publicity. Between the date of this Agreement and the
Closing Date, ALRI and TIAI shall discuss and coordinate with
respect to any public filing or announcement or any internal or
private announcement (including any general announcement to
employees) concerning the contemplated transaction.
7.5 Regulatory Matters. TIAI and ALRI shall (a) file with
applicable regulatory authorities any applications and related
documents required to be filed by them in order to consummate the
contemplated transaction and (b) cooperate with each other as they
may reasonably request in connection with the foregoing.
7.6 Confidentiality. Prior to the Closing Date (or at any
time if the Closing does not occur) each of TIAI and ALRI shall keep
confidential and not disclose to any Person (other than its
employees, attorneys, accountants
and advisors) or use (except in
connection with the transactions contemplated hereby) all non-public
information obtained pursuant to Section 7.1. Following the Closing,
each of TIAI and ALRI shall keep confidential and not disclose to
any Person (other than its employees, attorneys, accountants and
advisors) or use (except in connection with preparing Tax Returns
and conducting proceeds relating to Taxes) any nonpublic information
relating to the other. This Section 7.6 shall not be violated by
disclosure pursuant to court order or as otherwise required by law,
on condition that notice of the requirement for such disclosure is
given the other party prior to making any disclosure and the party
subject to such requirement cooperates as the other may reasonably
request in resisting it. If the Closing does not occur, each of TIAI
and ALRI shall return to the other, or destroy, all information it
shall have received from the other in connection with this Agreement
and the transactions contemplated hereby, together with any copies
or summaries thereof or extracts therefrom. Each of TIAI and ALRI
shall use their best efforts to cause their respective
representatives, employees, attorneys, accountants and advisors to
whom information is disclosed pursuant to Section 7.1 to comply with
the provisions of this Section 7.6.
7.7 Reverse Mergers; Antidilution. TIAI and its officers and
directors hereby agree that for a period of 12 months from the date
hereof the merged company shall not engage in any reverse stock
splits or other stock combinations or change any other attributes of
any of the Company's stock. TIAI and its officers and directors
hereby agree that except with respect to the proposed $1,000,000
private placement at a price of $1.00 per share, the issuance of
shares upon the exercise of options granted to the Xxxxxxxxx Group,
the issuance of shares in exchange for legal services (up to 27,500
restricted shares of stock) and the issuance of shares upon the
exercise of employee options at $1.00 per share for up to 700,000
shares (vesting over five years), for a period of 12 months the
Company shall not issue any new series of stock at a purchase price
of less than $1.00 per share without the consent of a majority of
the initial ALRI shareholders.
7.8 Rule 504 Sales. TIAI agrees not to make any sales of
securities in accordance with Rule 504 promulgated under Regulation
D of the Securities Act.
8. Conduct of ALRI's Business Prior to the Closing.
8.1 Operation in Ordinary Course. Between the date of this
Agreement and the Closing Date. ALRI shall cause conduct its
businesses in all material respects in the ordinary course.
8.2 Business Organization. Between the date of this Agreement
and the Closing Date, ALRI shall (a) preserve substantially intact
the business organization of ALRI; and (b) preserve in all material
respects the present business relationships and good will of ALRI
and each of its Subsidiaries.
8.3 Corporate Organization. Between the date of this Agreement
and the Closing Date, ALRI shall not cause or permit any amendment
of its certificate of incorporation or by-laws (or other governing
instrument) and shall not:
a. issue, sell or otherwise dispose of any of its Equity
Securities, or create, sell or otherwise dispose of any options,
rights, conversion rights or other agreements or commitments of any
kind relating to the issuance, sale or disposition of any of its
Equity Securities;
b. create or suffer to be created any Encumbrance
thereon, or create, sell or otherwise dispose of any options,
rights, conversion rights or other agreements or commitments of any
kind relating to the sale or disposition of any Equity Securities;
c. reclassify, split up or otherwise change any of its
Equity Securities;
d. be party to any merger, consolidation or other
business combination;
e. sell, lease, license or otherwise dispose of any of
its properties or assets (including, but not limited to rights with
respect to patents and registered trademarks and copyrights or other
proprietary rights), in an amount which is material to the business
or financial condition of ALRI and its Subsidiaries, taken as a
whole, except in the ordinary course of business; or
f. organize any new Subsidiary or acquire any Equity
Securities of any Person or any equity or ownership interest in any
business.
8.4 Other Restrictions. Between the date of this Agreement and
the Closing Date, ALRI shall not:
a. borrow any funds or otherwise become subject to,
whether directly or by way of guarantee or otherwise, any
indebtedness for borrowed money;
b. create any material Encumbrance on any of its
material properties or assets;
c. except in the ordinary course of business, increase
in any manner the compensation of any director or officer or
increase in any manner the compensation of any class of employees;
d. create or materially modify any material bonus,
deferred compensation, pension, profit sharing, retirement,
insurance, stock purchase, stock option, or other fringe benefit
plan, arrangement or practice or any other employee benefit plan (as
defined in section 3(3) of ERISA);
e. make any capital expenditure or acquire any property
or assets;
f. enter into any agreement that materially restricts
ALRI, TIAI or any of their Subsidiaries from carrying on business;
g. pay, discharge or satisfy any material claim,
liability or obligation, absolute, accrued, contingent or otherwise,
other than the payment, discharge or satisfaction in the ordinary
course of business of liabilities or obligations reflected in the
ALRI Financial Statements or incurred in the ordinary course of
business and consistent with past practice since the date of the
ALRI Financial Statements; or
h. cancel any material debts or waive any material
claims or rights.
9. Definitions.
As used in this Agreement, the following terms have the meanings
specified or referred to in this Section 9.
9.1 "Business Day" Any day that is not a Saturday or Sunday
or a day on which banks located in the City of New York are
authorized or required to be closed.
9.2 "Code" The Internal Revenue Code of 1986, as amended.
9.3 "Disclosure Letter" A letter dated the date of this
Agreement, executed by either TIAI and ALRI, addressed and delivered
to the other and containing information required by this Agreement
and exceptions to the representations and warranties under this
Agreement.
9.4 "Encumbrances" Any security interest, mortgage, lien,
charge, adverse claim or restriction of any kind, including, but not
limited to, any restriction on the use, voting, transfer, receipt of
income or other exercise of any attributes of ownership, other than
a restriction on transfer arising under Federal or state securities
laws.
9.5 "Equity Securities" See Rule 3a 11 1 under the
Securities Exchange Act of 1934.
9.6 "ERISA" The Employee Retirement Income Security Act of
1974, as amended.
9.7 "Governmental Body" Any domestic or foreign national,
state or municipal or other local government or multi-national body
(including, but not limited to, the European Economic Community),
any subdivision, agency, commission or authority thereof.
9.8 "Knowledge" Actual knowledge, after reasonable
investigation.
9.9 "Person" Any individual, corporation, partnership, joint
venture, trust, association, unincorporated organization, other
entity, or Governmental Body.
9.10 "Subsidiary" With respect to any Person, any corporation
of which securities having the power to elect a majority of that
corporation's Board of Directors (other than securities having that
power only upon the happening of a contingency that has not
occurred) are held by such
Person or one or more of its Subsidiaries.
10. Termination.
10.1 Termination. This Agreement may be terminated before the
Closing occurs only as follows:
a. By written agreement of TIAI and ALRI at any time.
b. By ALRI, by notice to TIAI at any time, if one or
more of the conditions specified in Section 4 is not satisfied at
the time at which the Closing (as it may be deferred pursuant to
Section 2.1) would otherwise occur or if satisfaction of such a
condition is or becomes impossible.
c. By TIAI, by notice to ALRI at any time, if one or
more of the conditions specified in Section 3 is not satisfied at
the time at which the Closing (as it may be deferred pursuant to
Section 2.1), would otherwise occur of if satisfaction of such a
condition is or becomes impossible.
d. By TIAI ro ALRI, by notice to the other at any time
after June 30, 1999.
10.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 10.1, this Agreement shall terminate without any
liability or further obligation of any party to another.
13. Notices. All notices, consents, assignments and other
communications under this Agreement shall be in writing and shall be
deemed to have been duly given when (a) delivered by hand, (b) sent
by telex or facsimile (with receipt confirmed), provided that a copy
is mailed by registered mail, return receipt requested, or (c)
received by the delivery service (receipt requested), in each case
to the appropriate addresses, telex numbers and facsimile numbers
set forth below (or to such other addresses, telex numbers and
facsimile numbers as a party may designate as to itself by notice to
the other parties).
(a) If to ALRI:
c/o Law Offices of Xxxxx X. Xxxxxxx, Esq.
0000 X. Xxxxxx Xxx Xx. #000-X
Xxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxxxx
(b) If to TIAI:
Tangible Investments of America, Inc.
0000 X. Xxxxxxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. XxXxxxxx
with a copy to:
Law Offices of M. Xxxxxxx Xxxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
14. Miscellaneous.
14.2 Expenses. Each party shall bear its own expenses incident
to the preparation, negotiation, execution and delivery of this
Agreement and the performance of its obligations hereunder.
14.3 Captions. The captions in this Agreement are for
convenience of reference only and shall not be given any effect in
the interpretation of this agreement.
14.4 No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be
considered a waiver or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this
Agreement. Any waiver must be in writing.
14.5 Exclusive Agreement; Amendment. This Agreement supersedes
all prior agreements among the parties with respect to its subject
matter with respect thereto and cannot be changed or terminated orally.
14.6 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be considered an original,
but all of which together shall constitute the same instrument.
14.7 Governing Law. This Agreement and (unless otherwise
provided) all amendments hereof and waivers and consents hereunder
shall be governed by the internal law of the State of California,
without regard to the conflicts of law principles thereof.
14.8 Binding Effect. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective
successors and
assigns, provided that neither party may assign its
rights hereunder without the consent of the other, provided that,
after the Closing, no consent of TIAI shall be needed in connection
with any merger or consolidation of ARLI with or into another entity.
IN WITNESS WHEREOF, the corporate parties hereto have caused
this Agreement to be executed by their respective officers, hereunto
duly authorized, and entered into as of the date first above written.
ATTEST: AUSTIN LAND & RESOURCES, INC.
By: __ /s/ Xxxxxx Berney____
Secretary President
ATTEST: TANGIBLE INVESTMENTS OF AMERICA, INC.
By: _/s/ Xxxxxxx DiGenova___
Secretary President
EXHIBIT A
TIAI SHAREHOLDERS
Name ALRI Shares to be Issued
Xxxxxxx X. XxXxxxxx 15,544,500
Xxxx Xxxxxxx 208,000
Xxxxxxxxx & Xxxxxx, Inc. 160,000
Xxxx Xxxxxx 40,000
Xxxxx Xxxxx 40,000
MRC Legal Services Corporation 7,500
