Exhibit 10.1
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ALPHA
ASSET PURCHASE AGREEMENT
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This Asset Purchase Agreement (the "Agreement"), dated this
8th day of November, 1998, among CHEQUEMATE INTERNATIONAL, INC., a Utah
corporation ("Chequemate") doing business as C-3D Digital, Inc.; Chequemate's
wholly owned subsidiary Chequemate Technologies, Inc., a Utah corporation
("Buyer"), COAST COMMUNICATIONS, INC., a Nevada corporation, doing business in
Arizona as ALPHA BROADCASTING COMMUNICATIONS ("Seller"); Xxxxxx XxXxx; and Xxxx
XxXxxxx. Xxxxxx XxXxx and Xxxx XxXxxxx are the sole shareholders of the Seller
and are hereafter collectively referred to as the "Shareholders". Seller and
Shareholders are sometimes collectively referred to in this Agreement as
"Selling Parties."
WITNESSETH:
WHEREAS, Buyer desires to purchase from Seller and Seller
desires to sell to Buyer, on the terms and subject to the conditions of this
Agreement, certain assets and business of Seller;
THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties contained in this Agreement, the
parties agree as follows:
ARTICLE 1. TRANSFER OF ASSETS
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Subject to the terms and conditions set forth in this
Agreement, Seller agrees to sell, convey, transfer, assign and deliver to Buyer,
and Buyer agrees to purchase from Seller at the Closing described in Article 3
hereof, all of the assets, properties and business of Seller of every kind,
character and description, whether tangible, intangible, real, personal or
mixed, and wherever located (but excluding any assets specifically excluded in
the following Sections of this Article 1), all of which are sometimes
collectively referred to in this Agreement as the "Assets," including, but
without limitation to, the following:
1.1 Contracts. All of the contracts and contract rights
related to these agreements for pay-per-view and cable services to hotel/lodging
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rooms, which agreements are listed in SCHEDULE 1.1 attached hereto (hereinafter
referred to as the "Contracts").
1.2 Equipment. All the machinery, tools, appliances,
furniture, equipment (including essential replacement parts) and other tangible
personal property of every kind and description wherever they may be located
that are owned or leased by Seller, and are utilized in connection with Seller's
operations, a current list of which is attached hereto as Schedule 1.2
(hereinafter referred to collectively as the "Equipment"). At the Closing,
Seller shall deliver to Buyer the equipment as set forth in Schedule 1.2, or
appropriate documents transferring the ownership of the Equipment, free of any
claim or encumbrance. Good and marketable title to all such equipment shall be
transferred on delivery, free and clear of any encumbrances;
1.3 Intangibles. All trade names (including "Alpha
Broadcasting Communications"), trademarks, service marks, copyrights, patents,
patent rights, trade secrets, technical know-how, goodwill and other intangibles
(including (i) tort or insurance proceeds arising out of any damage or
destruction of any of the Assets between the date of this Agreement and the
Closing Date (as hereinafter defined); (ii) all contracts to be assumed by Buyer
pursuant to Article 4 used by Seller in (or owned by Seller and useful in) the
operation of the business, but excluding accounts receivable, accounts payable,
contracts not assumed by Buyer pursuant to Article 4, bank accounts, and tax
deposits;
1.4 Books and records. All papers and records in Seller's
care, custody or control relating to any or all of the above-described Assets
and the operation thereof, including, but not limited to, all blueprints and
specifications, personnel and labor relations records, environmental control
records, sales records, accounting and financial records, maintenance and
production records; and
1.5 Other Assets. All product rights in the equipment and
all improvements thereon. All prepaid expenses relating to any of the Assets and
the operation of Seller's business sold pursuant to this Agreement.
ARTICLE 2. PURCHASE PRICE
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2.1 Payment of Purchase Price. In consideration for the
transfer and assignment by Seller of the Assets, and in consideration of the
representations, warranties and covenants of the Selling Parties set forth
herein, Chequemate and Buyer on the conditions set forth herein and subject to
the provisions in Article 9 state that:
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(a) Chequemate shall issue 250,000 shares of Chequemate's
restricted common stock ( hereinafter referred to as the "Shares") to
the Seller at the time of Closing.
(b) The Buyer shall pay to the Seller the sum of $60,000.00 in
cash at the time of the closing.
(c) The Buyer shall pay the Seller, each month for the 18
months following the Closing, an amount equal to the monthly interest
on the outstanding balance of the purchase price ($440,000.00). The
Buyer and the Seller agree that the annual rate of interest on the
outstanding balance of the purchase price shall be ten percent (10%).
(d) The Buyer shall pay the Seller the sum of $440,000.00 18
months after the Closing. This payment shall be the final payoff of the
purchase price by the Buyer.
(e) Buyer shall assume and discharge, and shall indemnify
Seller against, liabilities and obligations of the Seller under the
contracts or other agreements, if any as specified on SCHEDULE 4, but
only to the extent that such liabilities or obligations accrue on or
after the Closing Date.
ARTICLE 3. THE CLOSING
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The closing of the purchase and sale of the Assets by Seller
to Buyer (the "Closing") shall take place at the offices of Xxxxx X. Xxxx,
attorney at law, which are located at 3ll Xxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxx
Xxxx Xxxx, Xxxx, at 10:00 a.m. local time, on Tuesday, December 1, 1998, or at
such other place and/or time as the parties may agree in writing (the "Closing
Date"). In the event that the conditions specified in this Agreement have not
been fulfilled by such date, Buyer may extend the Closing Date for a period or
periods not exceeding an aggregate of 30 days by giving written notice to the
Selling Parties.
Chequemate shall perform its due diligence inspection of Alpha
Broadcasting Communications; equipment, properties, contracts and all other
items reasonably necessary to complete the inspection on or before the Closing
Date of closing set forth above.
3.1 Selling Parties' Obligations at the Closing. At the
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Closing, Selling Parties shall deliver or cause to be delivered to Buyer:
(a) instruments of assignment and transfer of all of the
Assets of Seller to be transferred hereunder, in form and substance
satisfactory to Buyer's counsel;
(b) instruments of assignment and transfer of all contracts
being transferred by seller to buyer as outlined in SCHEDULE 1.1.
(c) the UCC search reports referred to in paragraph 9.2
hereof; and
(d) the certificate of the President or Secretary of the
Seller confirming that proper minutes and resolutions of the Seller's
Board of Directors and Shareholders have been secured prior to the
Closing whereby the sale of the Assets has been approved.
Simultaneously with the consummation of the transfer, Seller,
through its officers, agents, and employees, shall put Buyer into full
possession and enjoyment of all the Assets to be conveyed and transferred by
this Agreement.
Selling Parties, at any time before or after the closing Date,
shall execute, acknowledge, and deliver any further assignments, conveyances and
other assurances, documents and instruments of transfer, reasonably requested by
Buyer and shall take any other action consistent with the terms of this
Agreement that may reasonably be requested by Buyer for the purpose of
assigning, transferring, granting, conveying and confirming to Buyer, or
reducing to possession, any or all property and assets to be conveyed and
transferred by this Agreement. If requested by Buyer, Selling Parties further
agree to prosecute or otherwise enforce in their own names for the benefit of
Buyer any claims, rights, or benefits that are transferred to Buyer by this
Agreement and that require prosecution or enforcement in either of the Selling
Parties' name. Any prosecution or enforcement of claims, rights, or benefits
under this Section shall be solely at Buyer's expense, unless the prosecution or
enforcement is made necessary by a breach of this Agreement by Selling Parties.
3.2 Buyer's Obligations at Closing. Subject to the provision
of Article 9, at the Closing, Buyer shall deliver to Seller the following
instruments and documents against delivery of the items specified in Section
3.1:
(a) a Chequemate stock certificate issued in the name of Coast
Communications, Inc. for 250,000 shares of restricted common stock; and
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(b) the certificate of the President or Secretary of the Buyer
confirming that proper minutes and resolutions of the Buyer's Board of Directors
have been secured prior to the Closing whereby the purchase of the Assets has
been approved.
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ARTICLE 4. ASSUMPTION OF LIABILITIES
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Buyer is not assuming any debt, liability or obligation of
Seller, whether known or unknown, fixed or contingent, except as herein
specifically otherwise provided. Selling Parties agree to indemnify and hold
Buyer harmless against all debts, claims, liabilities and obligations of Seller
not expressly assumed by Buyer hereunder, and to pay any and all attorneys' fees
and legal costs incurred by Buyer, its successors and assigns in connection
therewith. Buyer shall have the benefit of and shall perform all contracts and
commitments, if any, specifically disclosed in SCHEDULE 1.1, in accordance with
the terms and conditions thereof, except to the extent modifications are
specifically disclosed on such SCHEDULE 1.1.
ARTICLE 5. EXCISE AND PROPERTY TAXES
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Seller shall pay all sales, use and transfer taxes arising out
of the transfer of the Assets and shall pay its portion, prorated as of the
Closing Date, of state and local personal property taxes of the business. Buyer
shall not be responsible for any business, occupation, withholding or similar
tax, or for any taxes of any kind related to any period before the Closing Date.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF SELLING PARTIES
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Selling Parties, jointly and severally, hereby represent and
warrant to Buyer that the following facts and circumstances are, and except as
contemplated hereby, at all times up to the Closing Date will be true and
correct, and hereby acknowledge that such facts and circumstances constitute the
basis upon which Buyer is induced to enter into and perform this Agreement. Each
warranty set forth in this Article 6 shall survive the Closing and any
investigation made by or on behalf of Buyer.
6.1 Organization, Good Standing and Qualification. Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of Nevada, has all necessary corporate powers to own its properties and to
carry on its business as now owned and operated by it, and is duly qualified to
transact interstate business and is in good standing in all jurisdictions in
which the nature of its business or of its properties makes such qualification
necessary. Coast Communications, Inc. is validly authorized to conduct business
as Alpha Broadcasting Communications in the states of Arizona, California,
Nevada and New Mexico.
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6.2 Capital Structure. The authorized number of shares of
Seller is 2.5 million, all of one class, of which 2.5 million shares (the
"Shares") are issued and outstanding, all of which are owned of record and
beneficially by the Shareholders. All the Shares are validly issued, fully paid,
and nonassessable. There are no outstanding subscriptions, options, rights,
warrants, convertible securities, or other agreements or commitments obligating
Seller to issue or to transfer from treasury any additional shares.
6.3 Financial Statements. SCHEDULE 6.3 to this Agreement sets
forth the unaudited balance sheet of Seller as of November 1, 1998 for the
period of January 1, 1999 until such date, as compiled by Seller. The balance
sheet in SCHEDULE 6.3 is referred to as the "Financial Statements." The
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently followed by Seller throughout the periods
indicated, and fairly present the financial position of Seller as of the date of
the balance sheet included in the Financial Statements.
6.4 Absence of Specified Changes. Since the November 1, 1998
date of the Financial Statements, there has not been any:
(a) transaction by Seller except in the ordinary course of
business as conducted on that date;
(b) capital expenditure by Seller exceeding $10,000.00;
(c) material adverse change in the financial condition,
liabilities, assets, business or prospects of Seller;
(d) destruction, damage to, or loss of any assets of Seller
(whether or not covered by insurance) that materially and adversely
affects the financial condition, business or prospects of Seller;
(e) labor trouble or other event or condition of any character
materially and adversely affecting the financial condition, business,
assets or prospects of Seller;
(f) change in accounting methods or practices (including,
without limitation, any change in depreciation or amortization
policies or rates) by Seller;
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(g) revaluation by Seller of any of its assets;
(h) sale or transfer of any asset of Seller, except in the
ordinary course of business;
(i) execution, creation, amendment or termination of any
contract, agreement or license to which Seller is a party;
(j) loan by Seller to any person or entity, or guaranty by
Seller of any loan;
(k) waiver or release of any right or claim of Seller, except
in the ordinary course of business;
(l) mortgage, pledge or other encumbrance of any asset of
Seller;
(m) other event or condition of any character that has or
might reasonably have a material and adverse effect on the financial
condition, business, assets or prospects of Seller; or
(n) agreement by Seller to do any of the things described in
the preceding clauses (a) through (m).
6.5 Tax Returns and Audits. Within the times and in the manner
prescribed by law, Seller has filed all domestic and foreign, federal, state and
local tax returns required by law and has paid all taxes, assessments and
penalties due and payable. There are no present disputes as to taxes of any
nature payable by Seller.
6.6 Inventories. No items included in the Seller's inventories
have been pledged as collateral or are held by the Seller on consignment from
others.
6.7 Other Tangible Personal Property. The Equipment described
in Section 1.2 and SCHEDULE 1.2 of this Agreement constitutes all the items of
tangible personal property owned by, in the possession of, or used by Seller in
connection with the business sold pursuant to this Agreement. The Equipment
listed in SCHEDULE 1.2 constitutes all tangible personal property necessary for
the conduct by Seller of the business as now conducted.
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No Equipment used by Seller in connection with its business to
be sold pursuant to this agreement is held under any lease, security agreement,
conditional sales contract, or other title retention or security arrangement.
6.8 Trade Names, Trademarks and Copyrights. Except as set
forth in SCHEDULE 6.8, Seller does not use any trademark, service xxxx, trade
name or copyright in its business to be sold pursuant to this Agreement, or own
any trademarks, trademark registrations or applications, trade names, service
marks, copyrights, or copyright registrations or applications. No person (other
than Seller) owns any trademark, trademark registration or application, service
xxxx, trade name, copyright, or copyright registration or application, the use
of which is necessary or contemplated in connection with the performance of any
of the Contracts.
6.9 Title to Assets. Seller has good and marketable title to
all of the Assets and interests in Assets, whether personal, tangible, and
intangible, which constitute all the Assets and interests in assets that are
used in the business of Seller to be sold pursuant to this Agreement. All the
Assets are free and clear of mortgages, liens, pledges, charges, encumbrances,
equities, claims, easements, rights of way, covenants, conditions, or
restrictions, (i) the lien of current taxes not yet due and payable; and (ii)
possible minor matters that, in the aggregate, are not substantial in amount and
do not materially detract from or interfere with the present or intended use of
any of the Assets, nor materially impair business operations. All tangible
personal property of Seller is in good operating condition and repair, ordinary
wear and tear excepted. Except as set forth on the appropriate SCHEDULE listing
such Assets, neither any officer, nor any director or employee of Seller, nor
any spouse, child or other relative of any of these persons, owns, or has any
interest, directly or indirectly, in any of the personal property owned by or
leased to Seller or any copyrights, patents, trademarks, trade names or trade
secrets licensed by Seller for use in the business to be sold pursuant to this
Agreement. Seller does not occupy any real property in violation of any law,
regulation or decree.
6.10 Customers and Sales. SCHEDULE 1.1 to this Agreement is a
correct and current list of all customers of Seller for the business to be sold
pursuant to this Agreement. Seller has no information and is not aware of any
facts indicating that any of these customers intend to cease doing business with
Seller or materially alter the amount of the business that they are presently
doing with Seller.
6.11 Insurance Policies. SCHEDULE 6.11 to this Agreement is a
description of all insurance policies held by Seller concerning the Assets. All
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these policies are in the respective principal amounts set forth in SCHEDULE
6.11, Seller has maintained and now maintains (i) insurance on all the Assets of
a type customarily insured, covering property damage and loss of income by fire
or other casualty, and (ii) adequate insurance protection against all
liabilities, claims, and risks against which it is customary to insure.
6.12 Other Contracts. Except as set forth in SCHEDULE 1.2, the
Assets are not bound by any distributor's or manufacturer's representative or
agency agreement, any agreement not entered into in the ordinary course of
business, any indenture, mortgage, deed of trust, lease or any agreement that is
unusual in nature, duration or amount. The performance by Buyer of any of the
agreements described on SCHEDULE 1.1 will not result in Buyer becoming bound or
liable under any distributor's or manufacturer's representative or agency
agreement. All contracts which will be assigned to or assumed by Buyer under
this Agreement are valid and binding upon the parties thereto. There is no
default or event that with notice or lapse of time, or both, would constitute a
default by any party to any of the agreements listed in SCHEDULE 1.1. Seller has
not received notice that any party to any of the agreements listed in SCHEDULE
1.1 intends to cancel or terminate any of these agreements or to exercise or not
exercise any options under any of these agreements. Seller is not a party to,
nor is Seller or the Assets bound by, any agreement that is materially adverse
to the business, property, or financial condition of Seller.
6.13 Compliance with Laws. Seller has complied with, and is
not in violation of, applicable federal, state or local statutes, laws and
regulations (including, without limitation, any applicable environmental,
health, building, zoning or other law, ordinance or regulation) affecting the
Assets or the operation of its business to be sold pursuant to this Agreement.
6.14 Litigation. Except as set forth in SCHEDULE 6.14, there
is no suit, action, arbitration or legal, administrative or other proceeding, or
governmental investigation pending, or to the best knowledge of Selling Parties,
threatened, against or affecting Seller, or any of its business, assets or
financial condition. Seller is not in default with respect to any order, writ,
injunction or decree of any federal, state, local or foreign court, department,
agency or instrumentality. Seller is not presently engaged in any legal action
to recover moneys due to it or damages sustained by it.
6.15 Assets Sufficient for Conduct of Business. The Assets
constitute all of the assets required for Buyer to conduct the business of
Seller as it is presently conducted.
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6.16 Agreement will Not Cause Breach or Violation. Neither the
entry into this Agreement nor the consummation of the transactions contemplated
hereby will result in or constitute any of the following: (i) a breach of any
term or provision of this Agreement; (ii) a default or an event that, with
notice or lapse of time, or both, would be a default, breach or violation of the
Articles of Incorporation or Bylaws of Seller or any lease, license, promissory
note, conditional sales contract, commitment, indenture, mortgage, deed of trust
or other agreement, instrument or arrangement to which Seller is a party or by
which Seller or the Assets are bound; (iii) an event that would permit any party
to terminate any agreement or to accelerate the maturity of any indebtedness or
other obligation of one or more of Selling Parties; (iv) the creation or
imposition of any lien, charge or encumbrance on any of the Assets; or (v) the
violation of any law, regulation, ordinance, judgment, order or decree
applicable to or affecting Seller or the Assets.
6.17 Authority and Consents. Seller has the right, power,
legal capacity and authority to enter into, and perform its obligations under
this Agreement, and no approvals or consents of any persons other than Selling
Parties are necessary in connection with it. The execution and delivery of this
Agreement by Seller have been duly authorized by all necessary corporate action
of Seller (including any necessary action by Seller's security holders), and
this Agreement constitutes a legal, valid and binding obligation of Seller
enforceable in accordance with its terms.
6.18 Interest in Customers, Suppliers and Competitors. Neither
the Selling Parties, nor any officer, director or employee of any of the Selling
Parties, nor any spouse or child of any of them has any direct or indirect
interest in any competitor, supplier or customer of Seller or in any person with
whom Seller is doing business in the business to be sold pursuant to this
Agreement.
6.19 Corporate Documents. Seller has furnished to Buyer for
its examination (i) copies of the Articles of Incorporation and Bylaws of Seller
and (ii) the minute books of Seller containing all records required to be set
forth of all proceedings, consents, actions and meetings of the shareholders and
board of directors of Seller to consummate the transaction described in this
business.
6.20 Documents Delivered. Each copy or original of any
agreement, contract or other instrument which is identified in any exhibit
delivered by Selling Parties or their counsel to Buyer (or its counsel or
representatives), whether before or after the execution hereof, is in fact what
it is purported to be by Selling Parties and has not been amended, canceled or
otherwise modified.
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6.21 Full Disclosure. None of the representations and
warranties made by Selling Parties or made in any letter, certificate or
memorandum furnished or to be furnished by Selling Parties, or on their behalf,
contains or will contain any untrue statement of a material fact, or omits any
material fact the omission of which would make the statements made misleading.
There is no fact known to Selling Parties which materially adversely affects, or
in the future may (so far as Seller can now reasonably foresee) materially
adversely affect the condition, Assets, liabilities, business operations or
prospects of Seller that has not been set forth herein or heretofore
communicated to Buyer in writing pursuant hereto.
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ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER.
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Chequemate and Buyer jointly and severally represent and warrant to the
Seller and the Shareholders as follows:
7.1 Organization and Qualification. Chequemate is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Utah. All subsidiaries of Chequemate are legal entities that are
duly organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation. Chequemate has all requisite power
and authority to own or operate its properties and conduct its business as it is
now being conducted. Chequemate is duly qualified and in good standing as a
foreign corporation or entity authorized to do business in each of the
jurisdictions in which the character of the properties owned or held under lease
by it or the nature of the business transacted by it makes such qualification
necessary.
7.2 Capitalization; Subsidiaries. The authorized capital stock
of Chequemate consists of 500,000,000 shares of Chequemate's Common Stock. As of
September 30, 1998, 17,310,792 shares of Chequemate's Common Stock were issued
and outstanding. All issued and outstanding shares of capital stock of
Chequemate are validly issued, fully paid, non-assessable and free of preemptive
rights.
7.3 Authority Relative to this Agreement. Chequemate has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of
Chequemate, and no other corporate proceedings on the part of Chequemate are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered by
Chequemate and, assuming this Agreement constitutes a valid and binding
obligation of the Seller, this Agreement constitutes a valid and binding
agreement of Chequemate, enforceable against Chequemate in accordance with its
terms.
7.4 SEC Reports. Since January 1, 1998, to the best of its
knowledge Chequemate has filed all required forms, reports and documents
("Chequemate SEC Reports") with the Securities and Exchange Commission (the
"SEC") required to be filed by it pursuant to the federal securities laws and
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the SEC rules and regulations thereunder, all of which have complied in all
material respects with all applicable requirements of the Securities Act of 1933
(the "Securities Act") and the Securities Exchange Act of 1934 (the "Exchange
Act"), and the rules and interpretive releases promulgated thereunder. None of
such Chequemate SEC Reports, including without limitation any financial
statements, notes, or schedules included therein, at the time filed, contained
any untrue statement of a material fact, or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
Each of the consolidated balance sheets in or incorporated by reference
into the Chequemate SEC Reports fairly presents or will fairly present the
financial position of the entity or entities to which it relates as of its date,
and each of the related consolidated statements of operations and retained
earnings and cash flows or equivalent statements in the Chequemate SEC Reports
(including any related notes and schedules) fairly presents or will fairly
present the results of operations, retained earnings and cash flows, as the case
may be, of the entity or entities to which it relates for the period set forth
therein (subject in the case of unaudited interim statements, to normal year-end
audit adjustments) in each case in accordance with generally-accepted accounting
principles applicable to the particular entity consistently applied throughout
the periods involved, except as may be noted therein; and independent certified
public accountants for Chequemate have rendered or will render an unqualified
opinion with respect to each audited financial statement included in the
Chequemate SEC Reports. The consolidated financial statements included in the
Chequemate SEC Reports are hereinafter sometimes collectively referred to as the
"Chequemate Financial Statements."
7.5 Consents and Approvals; No Violation. Neither the
execution and delivery of this Agreement by Chequemate nor the consummation of
the transactions contemplated hereby nor compliance by Chequemate with any of
the provisions hereof will conflict with or result in any breach of any
provision of the Articles of Incorporation or By-laws of Chequemate or any
Subsidiary, require any consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Authority, except pursuant to the
Securities Act and the Exchange Act, such filings and approvals as may be
required under the "blue sky", takeover or securities laws of various states, or
result in a default (with or without due notice or lapse of time or both) (or
give rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
contract, license, agreement or other instrument or obligation to which
Chequemate is a party or by which Chequemate, any of its Subsidiaries or any of
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their respective assets may be bound, result in the creation or imposition of
any lien, charge or other encumbrance on the assets of Chequemate or violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Chequemate or any of its respective assets.
7.6 Litigation, etc. Except as disclosed in the Chequemate SEC
Reports, there is no action, claim, or proceeding pending or, to the knowledge
of Chequemate, threatened, to which Chequemate is or would be a party before any
court or Governmental Authority acting in an adjudicative capacity or any
arbitrator or arbitration tribunal with respect to which there is a reasonable
likelihood of a determination having, or which, insofar as reasonably can be
foreseen in the future would have, a material adverse effect on Chequemate and
since December 31, 1997, there have been no claims made or actions or
proceedings brought against any officer or director of Chequemate arising out of
or pertaining to any action or omission within the scope of his employment or
position with Chequemate, which claim, action or proceeding would involve a
material adverse effect on Chequemate taken as a whole. All material litigation
and other material administrative, judicial or quasi-judicial proceedings to
which Chequemate is a party or to which it has been threatened to be made a
party, are described in the Chequemate SEC Reports.
7.7 Compliance with Law and Permits. Chequemate has owned and
operated its properties and assets in substantial compliance with the provisions
and requirements of all laws, orders, regulations, rules and ordinances issued
or promulgated by all Governmental Authorities having jurisdiction with respect
thereto. All necessary governmental certificates, consents, permits, licenses or
other authorizations with regard to the ownership or operation by Chequemate of
their respective properties and assets have been obtained and no violation
exists in respect of such licenses, permits or authorizations. None of the
documents and materials filed with or furnished to any Governmental Authority
with respect to the properties, assets or businesses of Chequemate contains any
untrue statement of a material fact or fails to state a material fact necessary
to make the statements therein not misleading.
7.8 Chequemate Common Stock. The shares to be issued by
Chequemate pursuant to this Agreement have been duly authorized and, when issued
in accordance with the terms of the this Agreement, will be validly authorized
and issued and fully paid and nonassessable, and no shareholder of Chequemate
will have any preemptive rights or dissenter's right with respect thereto.
ARTICLE 8. SELLING PARTIES' OBLIGATIONS BEFORE CLOSING.
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Selling Parties covenant that, except as otherwise agreed in
writing by Buyer, from the date of this Agreement until the Closing:
8.1 Buyer's Access to Premises and Information. Buyer and its
counsel, accountants and other representatives shall be entitled to have full
access during normal business hours to all Seller's properties, books, accounts,
records, contracts and documents of or relating to the Assets. Selling Parties
shall furnish or cause to be furnished to Buyer and its representatives all data
and information concerning the business, finances and properties of Seller that
may reasonably be requested.
8.2 Conduct of Business in Normal Course. Seller shall carry
on its business and activities diligently and in substantially the same manner
as it previously has been carried on, and shall not make or institute any
unusual or novel methods of purchase, sale, lease, management, accounting or
operation that will vary materially from the methods used by Seller as of the
date of this Agreement.
8.3 Preservation of Business Relationships. Seller shall use
its best efforts, without making any commitments on behalf of Buyer, to preserve
its business organization intact, to keep available to Seller its present
employees, and to preserve its present relationships with suppliers, customers
and others having business relationships with it.
8.4 Maintenance of Insurance. Seller shall continue to carry
its existing insurance, subject to variations in amounts required by the
ordinary operations of its business. At the request of Buyer and at Buyer's sole
expense, the amount of insurance against fire and other casualties which, at the
date of this Agreement, Seller carries on any of the Assets or in respect of its
operations shall be increased by such amount or amounts as Buyer shall specify.
Seller shall cause Buyer to be named as an additional insured on each existing
insurance policy carried by Seller.
8.5 New Transactions. Seller shall not do, or agree to do
without the prior written consent of the Buyer, any of the following acts:
(a) enter into any contract, commitment or transaction not in
the usual and ordinary course of its business; or
(b) enter into any contract, commitment or transaction in the
usual and ordinary course of business involving an amount exceeding
$100,000.00, individually, or $100,000.00 in the aggregate; or
Page 21 of 81
(c) make any capital expenditures in excess of $50,000.00 for
any single item or $100,000.00 in the aggregate, or enter into any
leases of capital equipment or property under which the annual lease
charge is in excess of $50,000.00; or
(d) sell or dispose of any capital assets with a net book
value in excess of $ 50,000.00 individually, or $100,000.00 in the
aggregate.
8.7 Existing Agreements. Seller shall not modify, amend,
cancel or terminate any of its existing contracts or agreements, or agree to do
any of those acts.
8.8 Consent of Others. As soon as reasonably practical after
the execution and delivery of this Agreement, and in any event on or before the
Closing Date, Seller shall obtain the written consent of the persons described
in SCHEDULE 1.1 to this Agreement and will furnish to Buyer executed copies of
these consents to the assignment of the Contracts.
8.9 Representations and Warranties True at Closing. Selling
Parties shall use their best efforts to assure that all representations and
warranties of Selling Parties set forth in this Agreement and in any written
statements delivered to Buyer by Selling Parties under this Agreement will also
be true and correct as of the Closing Date as if made on that date and that all
conditions precedent to Closing shall have been met.
8.10 Sales and Use Tax on Prior Sales. Seller agrees to
furnish to Buyer a clearance certificate from the appropriate agencies and any
related certificates that Buyer may reasonably request as evidence that all
sales and use and other tax liabilities of Seller (other than income tax
liabilities) accruing before the Closing Date have been fully satisfied or
provided for.
8.11 Statutory Filings. Seller shall cooperate fully with
Buyer in preparing and filing all information and documents deemed necessary or
desirable by Buyer under any statutes or governmental rules or regulations
pertaining to the transactions contemplated by this Agreement.
ARTICLE 9. CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
-------------------------------------------
The obligations of Buyer to purchase the Assets under this
Agreement are subject to the satisfaction, at or before the Closing, of all the
conditions set out below in this Article 9. Buyer may waive any or all of these
Page 22 of 81
conditions in accordance with Section 14.2 hereof; provided however, that no
such waiver of a condition shall constitute a waiver by Buyer of any of its
other rights or remedies, at law or in equity, if Selling Parties shall be in
default of any of its representations, warranties or covenants under this
Agreement.
9.1 Accuracy of Selling Parties' Representations and
Warranties. All representations and warranties by Selling Parties in this
Agreement or in any written statement that shall be delivered to Buyer by
Selling Parties under this Agreement shall be true on and as of the Closing Date
as though made at that time.
9.2 Absence of Liens. At or prior to the Closing, Buyer shall
have received UCC search reports dated as of a date not more than five days
before the Closing Date issued by the Secretaries of State for Arizona, Nevada,
California and New Mexico indicating that there are no filings under the Uniform
Commercial Code on file with such Secretary of State which name Coast
Communications Inc., Alpha Broadcasting Communications, Xxxxxx XxXxx or Xxxx
XxXxxxx as debtor or otherwise indicating any lien on the Assets, except for the
liens otherwise disclosed in the Schedules hereto.
9.3 Selling Parties' Performance. Selling Parties shall have
performed, satisfied, and complied with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by
Selling Parties on or before the Closing Date.
9.4 Certification by Seller. Buyer shall have received a
certificate, dated the Closing Date, signed and verified by Seller's president
or vice president and its treasurer or assistant treasurer, certifying, in such
detail as Buyer and its counsel may reasonably request, that the conditions
specified in Sections 9.1 and 9.3 have been fulfilled.
9.5 Absence of Litigation. No action, suit or proceeding
before any court or any governmental body or authority, pertaining to the
transaction contemplated by this Agreement or to its consummation, shall have
been instituted or threatened on or before the Closing Date.
9.6 Corporate Approval. The execution and delivery of this
Agreement by Seller, and the performance of its covenants and obligations under
Page 23 of 81
it, shall have been duly authorized by all necessary corporate action, and Buyer
shall have received copies of all resolutions pertaining to that authorization,
certified by the secretary of Seller.
9.7 Corporation Tax Clearance. Buyer shall have received a
Certificate of Good Standing for Seller as of a date not more than 3 days before
the Closing Date and a Letter of Account Status for Seller as of a date not more
than 3 days before the Closing Date certifying that all sales taxes or other
taxes of the Seller have been paid. Such documents are to be issued by the
states of Arizona, California, Nevada and New Mexico.
9.8 Certificate Regarding Employment Tax Obligations. Buyer
shall have received a Certificate of the President and Secretary of the Seller
stating that, as of the Closing Date, no contributions, interest, or penalties
are unpaid by Seller with regard to any payroll taxes, or unemployment or
workers' compensation contributions for periods prior to October 1, 1998.
9.9 Consents. All necessary agreements and consents of any
parties to the consummation of the transaction contemplated by this Agreement,
or otherwise pertaining to the matters covered by it, shall have been obtained
by Seller and delivered to Buyer.
9.10 Approval of Documentation. The form and substance of all
certificates, instruments and other documents delivered to Buyer under this
Agreement shall be satisfactory in all reasonable respects to Buyer and its
counsel.
9.11 Condition of Assets. The Assets shall not have been
materially or adversely affected in any way as a result of any fire, accident,
storm, or other casualty or labor or civil disturbance or act of God or the
public enemy.
9.12 Resale Certificate. Buyer shall have received from Seller
a sales tax resale certificate or other comparable document, as appropriate,
reasonably satisfactory to Buyer, with respect to the Assets being purchased by
Seller for resale.
9.13 Valuation of Assets. Buyer shall have accepted the
valuation of the Assets, as set forth on the schedules attached hereto (as
adjusted as of the Closing Date).
9.14 Completion of Due Diligence. All due diligence reasonably
Page 24 of 81
required by the Buyer has been completed, and the results of such due diligence
are satisfactory to the Buyer in its sole discretion and judgement with regard
to all aspects of the transaction, including by not limited to matters relating
to the Assets, or the intellectual property or financial prospects of the
business to be sold pursuant to this Agreement.
9.15 Compliance with Bulk Sales Laws. The parties have
complied with all applicable Bulk Sales Laws or similar provisions.
ARTICLE 10. CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
--------------------------------------------
The obligations of Seller to sell and transfer the Assets
under this Agreement are subject to the satisfaction, at or before the Closing,
of all the following conditions:
10.1 Accuracy of Buyer's Representations and Warranties. All
representations and warranties by Buyer contained in this Agreement or in any
written statement delivered by Buyer under this Agreement shall be true on and
as of the Closing as though such representations and warranties were made on and
as of that date.
10.2 Buyer's Performance. Buyer shall have performed and
complied with all covenants and agreements, and satisfied all conditions that it
is required by this Agreement to perform, comply with, or satisfy, before or at
the Closing.
10.3 Buyer's Corporate Approval. Buyer shall have received
corporate authorization and approval for the execution and delivery of this
Agreement and all corporate action necessary or proper to fulfill the
obligations of Buyer to be performed under this Agreement on or before the
Closing Date.
ARTICLE 11. EMPLOYEE PLANS
--------------
Buyer is not assuming any obligations of Seller relating to any
Employee Plan as defined herein, and Selling Parties represent that the Seller
has no Employee Plan in effect or to which the Seller is subject. For purposes
of this Agreement, the term "Employee Plan" includes all pension, retirement,
disability, medical, dental or other health insurance plans, life insurance or
other death benefit plans, profit sharing, deferred compensation, stock option,
bonus or other incentive plans, vacation benefit plans, severance plans, or
other employee benefit plans or arrangements including, without limitation, any
Page 25 of 81
pension plan as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974 ("ERISA") and any welfare plan as defined in Section 3(1)
of ERISA, whether or not funded, covering any employee or to which Seller is a
party or bound or makes or has made any contribution or by which Seller may have
any liability to any employee (including any such plan formerly maintained by or
in connection with which Seller may have any liability to any employee, and any
such plan which is a multi employer plan as defined in Section 3(37) (A) of
ERISA).
ARTICLE 12. SELLING PARTIES' OBLIGATIONS AFTER THE CLOSING
----------------------------------------------
12.1 Preservation of Goodwill. Following the Closing, Selling
Parties will restrict their activities so that Buyer's reasonable expectations
with respect to the goodwill, business reputation, employee relations and
prospects connected with the Assets will not be materially impaired. In
furtherance, but not in limitation of, this general obligation, Selling Parties
agree that, for a period of the longer of (a) three (3) years following the
Closing Date; (b) as long as any of the Warrants referred to in paragraph 2.1
are outstanding; or (c) as long as Buyer or its heirs, assigns or successors in
interest carry on a like business in the countries or areas specified:
(a) Selling Parties will not compete with the Buyer or engage in any
activity which is substantially the same as, or represents an outgrowth of, any
business or activity presently conducted by Seller if such business or activity
extends to the states of Arizona, California, Nevada, New Mexico or of any
counties of such states and/or any other county in which Seller has heretofore
engaged in business or otherwise established its goodwill, business reputation,
or any customer relations. For the purposes of this Agreement, the term
"compete" shall mean (i) calling on, soliciting or taking away, as a client or
customer, or attempting to call on, solicit or take away as a client or customer
any individual, partnership, corporation or association that was a client or
customer of the Seller; or (ii) entering into or attempting to enter into any
business or substantially similar business to or competing in any way with the
business of the Buyer, either alone or with any individual, partnership,
corporation or association; or (iii) acting as an agent, representative,
consultant, officer, director, independent contractor, or employee of an entity
or enterprise which is competing with the business of the Buyer; or (iv)
participating in any such competing entity or enterprise as an owner, partner,
limited partner, joint venturer, creditor or stockholder.
The parties intend that the covenant contained in the
preceding portion of this Section shall be construed as a series of separate
covenants, one for each state county. Each separate covenant shall be deemed
identical in terms to the covenant contained in this Section. If, in any
Page 26 of 81
judicial proceeding, a court shall refuse to enforce any of the separate
covenants deemed included in this Section, then such unenforceable covenant
shall be deemed eliminated from these provisions for the purpose of those
proceedings to the extent necessary to permit the remaining separate covenants
to be enforced.
(b) Selling Parties will not disclose to any person or use for
their own benefit any price lists, pricing data, customer lists, or similar
matters possessed by them relating to the Assets or the business transferred to
Buyer unless they first clearly demonstrate to Buyer that such matters are at,
the time of the proposed disclosure or use, of common knowledge within the
trade.
12.2 Change of Name. Selling Parties agree that after the
Closing Date they shall not use or employ in any manner directly or indirectly
the name "Alpha Broadcasting Communications," or any variation thereof.
12.3 Selling Parties' Indemnities. Selling Parties shall
indemnify, defend and hold harmless Chequemate and its officers, directors, and
agents against and in respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties and reasonable attorneys' fees, that Chequemate or
the Buyer, or their officers, directors, or agents shall incur or suffer, which
arise, result from or relate to any breach of, or failure by Selling Parties to
perform, any of their representations, warranties, covenants or agreements in
this Agreement or in any schedule, certificate, exhibit or other instrument
furnished or to be furnished by Selling Parties under this Agreement.
Notwithstanding any other provision of this Agreement, Selling Parties shall not
be liable to Chequemate, or the Buyer, or their officers, directors, or agents
on any warranty, representation or covenant made by Selling Parties in this
Agreement, regarding any single claim, loss, expense, obligation or other
liability that does not exceed $10,000; provided, however, that when the
aggregate amount of all such claims, losses, expenses, obligations and
liabilities not exceeding $10,000 each reaches $10,000, Selling Parties shall
thereafter be liable in full for all such breaches and indemnities, and
regarding all those claims, losses, expenses, obligations, and liabilities.
12.4 Access to Records. From and after the Closing, Selling
Parties shall allow Buyer, and its counsel, accountants and other
representatives, such access to records which after the Closing are in the
custody or control of Selling Parties as Buyer reasonably requires in order to
comply with its obligations under the law or under contracts assumed by Buyer
pursuant to this Agreement.
Page 27 of 81
12.5 Nonsolicitation of Employees. None of the Selling Parties
shall, prior to the third anniversary of the Closing solicit any employee of
Buyer to leave such employment if such employee was at any time between the date
hereof and the Closing an employee of Seller.
ARTICLE 13. COSTS
-----
13.1 Finder's or Broker's Fees. Each of the parties represents
and warrants that it has dealt with no broker or finder in connection with any
of the transactions contemplated by this Agreement, and, insofar as it knows, no
broker or other person is entitled to any commission or finder's fee in
connection with any of these transactions.
13.2 Expenses. Each of the parties shall pay all costs and
expenses incurred or to be incurred by it in negotiating and preparing this
Agreement and in closing and carrying out the transactions contemplated by this
Agreement.
ARTICLE 14. SECURITIES ASPECTS OF AGREEMENT
-------------------------------
14.1 All parties to this Agreement mutually understand, agree
and covenant that any referenced sale or other disposition of any security under
this Agreement shall be controlled and governed by this section. Specifically
should there arise any conflict of application or interpretation under this
section and any other provision or section of this Agreement, this section shall
be given primary definition and control. The term "securities" for the purposes
of this Agreement shall mean and include all shares of Chequemate, and any
warrants to acquire those shares as well as any other instrument or obligation
customary or commonly described as a security. Each of the following terms and
conditions of the issuance and distribution of the securities shall be fully
applicable unless otherwise specifically waved or treated in the following
paragraphs.
14.2 Each security issued pursuant to the terms of this
Agreement shall be a "restricted" security unless otherwise specifically
referenced as being issued pursuant to a registration or offering.
14.3 Each Selling Party understands and agrees that a
restricted security for the purposes of this Agreement is one which is issued
without meeting registration requirements under both federal and state law
Page 28 of 81
within the United States. Each party to this Agreement further agrees and
acknowledges that the nature of restricted security is that it is not freely
tradeable. That is, the holder of such security cannot immediately market or
further distribute such security in the open market, or through private
transactions without the express written consent of the issuer, primarily
Chequemate under the terms of this Agreement.
14.4 Each Selling Party fully acknowledges and understands
that the resale of a restricted security will normally require substantial
holding periods unless subsequently subject to an intervening registration under
applicable federal and state securities laws. Each Selling Party acquiring
restricted stock under this Agreement further acknowledges and agrees that the
principal, though not exclusive, means by which restricted securities are resold
under United States law and conforming state laws and regulations is Securities
and Exchange Commission ("SEC") Rule 144, which essentially requires a holding
period of one year before the stock can be resold or any interest therein
further sold or assigned. In general terms, Rule 144 would require that there be
current public information about the Company before the provisions of the Rule
could be relied upon for subsequent resales, that the aforementioned holding
period had been met, that the sales occurred through independent arms-length and
unsolicited brokerage transactions, that certain volume limitations on the
number of shares sold in each three month period be observed, and that a report
of sales will be filed with the SEC. Each Selling Party understands that the
foregoing constitutes only a general description of Rule 144 and that such
person is or has the means to become familiar with all of the specific
provisions and terms of Rule 144 through his independent legal advisors. Each of
the Selling Parties further acknowledges and agrees that while Rule 144 is not
exclusive, that it is anticipated and intended that it would be the primary
means by which securities acquired under this Agreement could be resold absent
the specific registration provisions of this Agreement.
14.5 Each Selling Party further acknowledges and agrees that,
except as specifically provided by the terms of this Agreement, none of the
corporate parties will have any obligation to register securities issued, and
have no present intention to register such securities other than is specifically
provided for by this Agreement. Each person under this Agreement acquiring
securities further understands and agrees that individual registration of
securities, absent registration by the issuer, is usually not practical and
should not be relied upon as a means for resales or other distributions of
securities acquired under this Agreement.
14.6 Any entity acquiring securities pursuant to this
Agreement with the intent to divide such securities among its principal
Page 29 of 81
shareholders as part of the acquisition process, will be responsible for
obtaining the knowledgeable consent and agreement of such actual shareholder to
the terms of this Agreement, specifically referencing this paragraph.
14.7 Each Selling Party fully understands and agrees that
should such person be deemed to be in a "control" position as to Chequemate
incident to the completion of this Agreement, that such person must comply with
the volume limitations of Rule 144 to complete sales of his or her securities
acquired, except for securities which have been otherwise registered pursuant to
this Agreement. A control person has been defined by the SEC, and by most states
securities regulatory agencies, as a person who has the capacity to exercise
control over the issuing company. While no precise mathematical formulation of a
control person is applicable to all situations, the following are generally
presumed to be control people:
(i) a person holding 10% or more of the shares of the issuing
company;
(ii) any principal officer or any director of the issuing company.
14.8 Seller represents that it is acquiring the Shares for its
own account, for investment and not with a view to the distribution or resale
thereof. The Selling Parties further represent that their financial and other
circumstances are such that they have adequate means of providing for their
current and anticipated future needs without having to sell or otherwise dispose
of the Shares, and that the Selling Parties are able to bear the economic risks
of this investment and consequently are able to hold the Shares for an
indefinite period of time and to sustain the loss of their entire investment in
the Shares, in the event such a loss should occur.
14.9 Seller acknowledges and represents that, due to its
knowledge and experience in financial and business matters, its investment
experience generally and its experience with investments similar to the Shares
in particular, Seller, either alone or together with its advisors, if any, is
able to understand and evaluate the nature and merits of, and the risks involved
in, its proposed investment in the Shares. Seller, either alone or together with
its advisors, if any, has the capacity to protect its own interests in
connection with this transaction.
14.10 Seller acknowledges that the Buyer and Chequemate have
furnished or made available to Seller all financial and other data relating to
Chequemate, required by Seller to enable it to make an informed decision
Page 30 of 81
concerning its approval of this transaction and its resulting acquisition of the
Shares. In particular, Seller acknowledges that it has received and reviewed the
financial statements of Chequemate for the past two years and complete copies of
all of the Chequemate SEC Reports for such period. Seller acknowledges that it
has been informed that Chequemate has not previously conducted business except
as disclosed in the Chequemate SEC Reports. Seller represents and acknowledges
that it and its principals have been engaged in the business of providing
pay-per-view and cable services in the hotel/lodging industry, which is intended
area of business for which the Assets are being acquired by the Buyer. In this
regard, Seller has been acquainted with the Chief Executive Officer of
Chequemate. Seller further represents and acknowledges that it has had full
opportunity to obtain additional information from Chequemate to verify the
accuracy of the information supplied by it and to evaluate the merits of its
investment decision, including, without limitation, full opportunity to ask
questions of and receive satisfactory answers and other information from
Chequemate, its officers, directors and other persons acting on its behalf, and
all such questions have been answered, and such other information supplied, to
Seller's full satisfaction. Seller is aware of, and has thoroughly evaluated, to
its own satisfaction, the high degree of risk associated with investing in
Chequemate, including but not limited to, the specific risks associated with
Chequemate's business and the risks associated with the ownership of common
stock.
14.11 Seller hereby represents and warrants to Chequemate that
Seller is an "accredited investor" as that term is defined in Rule 501(a) of
Regulation D. Seller further represents and warrants that it is a corporation,
and that each of the equity owners of Seller are "accredited investors" by
reason of the fact that each of the equity owners meets one or both of the
following criteria:
(i) The owner is a natural person whose
individual net worth, or joint net worth
with owner's spouse, at the time of this
agreement, exceeds $1,000,000; or
(ii) The owner is a natural person who had an
individual income in excess of $200,000 in
each of the two most recent years, or joint
income with owner's spouse in excess of
$300,000 in each of those years, and has a
reasonable expectation of reaching the same
income level in the current year.
Page 31 of 81
ARTICLE 15. FORM OF AGREEMENT
-----------------
15.1 Headings. The subject headings of the Articles and
Sections of this Agreement are included for purposes of convenience only, and
shall not affect the construction or interpretation of any of its provisions.
15.2 Entire Agreement; Modification; Waiver. This Agreement
constitutes the entire agreement between the parties pertaining to the subject
matter contained in it and supersedes all prior and contemporaneous agreements,
representations, and understandings of the parties. No supplement, modification
or amendment of this Agreement shall be binding unless executed in writing by
all the parties. No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the waiver.
15.3 Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
ARTICLE 16. PARTIES
-------
16.1 Parties in Interest. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties to it and their
respective successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third persons to any
party to this Agreement, nor shall any provisions give any third persons any
right of subrogation or action over against any party to this Agreement.
16.2 Assignment. This Agreement shall be binding on and shall
inure to the benefit of the parties to it and their respective heirs, legal
representatives, successors and assigns.
ARTICLE 17. REMEDIES
--------
17.1 Recovery of Litigation Costs. If any legal action or any
arbitration or other proceeding so brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default or
Page 32 of 81
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
17.2 Conditions Permitting Termination. Subject to the
provisions of Article 3 relating to the postponement of the Closing Date, either
party may on or prior to the Closing Date terminate this Agreement by written
notice to the other, without liability to the other, if any bona fide action or
proceeding shall be pending against either party on the Closing Date that could
result in an unfavorable judgment, decree or order that would prevent or make
unlawful the carrying out of this Agreement.
17.3 Defaults Permitting Termination. If either Buyer or
Seller materially defaults in the due and timely performance of any of its
warranties, covenants, or agreements under this Agreement, the non-defaulting
party or parties may on the Closing Date give notice of termination of this
Agreement, in the manner provided in Article 17. The notice shall specify with
particularity the default or defaults on which the notice is based. The
termination shall be effective five days after the Closing Date, unless the
specified default or defaults have been cured on or before this effective date
for termination.
ARTICLE 18. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
-----------------------------------------------------
All representations, warranties, covenants and agreements of the
parties contained in this Agreement, or in any instrument, certificate, opinion
or other writing provided for in it, shall survive the Closing.
ARTICLE 19. NOTICES
-------
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given on the
date of service if served personally on the party to whom notice is to be given,
Page 33 of 81
or on the third day after mailing if mailed to the party to whom notice is to be
given, by first class mail, registered or certified, postage prepaid, and
properly addressed as follows:
Seller: Coast Communications, Inc.
with copy to:
Shareholders: Xxxxxx XxXxx
0000 Xxxx Xxxxx Xxxxxx
Xxxx, Xxxxxxx 00000
Xxxx XxXxxxx
0000 Xxxx Xxxxxxxx Xxx.
Xxxx, Xxxxxxx 00000
with copy to:
Buyer: Chequemate International, Inc.
00 Xxxx 000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
with copy to: Xxxxx X. Xxxx
000 Xxxxx XxxxxxXxxxxx
Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Any party ma} change its address for purposes of$this Article by giving$the
otler parties written notige of the new address in$the manner set forth above.
Page 34 of 81
ARTMCLE 20. GOVERNMNG LAW
-------------
This Agreement$ shall fe construed in $accordance with, and
governed by the$laws of$the State of Utah.
AVTICLE 25. MISCELLANEOUW
-------------
21.1 Announcements. $None of$ Selling Parties will make any
announcements to the public or to employees of Seller concerning this Agreement
or the transactions contemplated hereby without the prior approval of Buyer,
which will not be unreasonably withheld. Notwithstanding any failure of Buyer to
approve it, Selling Parties may make an announcement of substantially the same
information as theretofore announced to the public by Buyer or any announcement
required by applicable law, but Selling Parties shall in either case notify
Buyer of the contents thereof reasonably promptly in advance of its issuance.
21.2 References. Unless otherwise specified, references to
Sections or Articles are to Sections or Articles in this Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have duly
executed it as of the day and year first above written.
CHEQUEMATE INTERNATIONAL, INC., CHEQUEMATE TECHNOLOGIES,
a Utah corporation INC., a Utah corporation
By /s/ Xxxxxxx Xxxx By /s/ Xxxxxxx Xxxx
------------------------- --------------------------
Xxxxxxx Xxxx Xxxxxxx Xxxx
Its: C.E.O. Its: C.E.O.
SELLER
COAST COMMUNICATIONS, INC.,
a Nevada corporation
By /s/ Xxxx X.X. XxXxxxx
Xxxx X.X. XxXxxxx
SHAREHOLDERS
/s/ Xxxxxx XxXxx
XXXXXX XXXXX
/s/ Xxxx X. X. XxXxxxx
XXXX XXXXXXX
Page 35 of 81
