EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
FOR THE ACQUISITION OF
AVAILABLE MONEY, INC.
BY
iGAMES ENTERTAINMENT, INC.
FROM
XXXXXX XXXXX and XXXXXX FRESHMAN
JANUARY 6, 2004
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STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into as of the 6th day of January,
2004, by and among iGAMES ENTERTAINMENT, INC., a Nevada corporation ("BUYER"),
AVAILABLE MONEY, INC., a Nevada corporation ("AVAILABLE Money"), and XXXXXX
XXXXX and XXXXXX FRESHMAN, adult individuals (individually a "SELLER" and
collectively "Sellers"), and Xxxxxxxxxxx X. Xxxxxxxxxx ("XXXXXXXXXX").
RECITALS:
WHEREAS, Sellers collectively own all of the issued and outstanding
shares of capital stock of Available Money;
WHEREAS, Buyer has agreed to purchase from Sellers, and Sellers have
agreed to sell to Buyer, all of the issued and outstanding capital stock of
Available Money upon the terms and subject to the conditions hereof; and
WHEREAS, Available Money has a vested interest in the Contemplated
Transactions and is a Party to this Agreement in order to make certain
representations and warranties to Buyer; and
WHEREAS, Xxxxxxxxxx has a vested interest in the Contemplated
Transactions and is a Party to this Agreement in order to make certain
representations and warranties regarding MCA to Sellers.
NOW, THEREFORE, for and in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties
and covenants herein contained, intending to be legally bound hereby, the
Parties agree as follows:
1. DEFINITIONS. As used herein, the following terms will have the
meanings ascribed thereto in this Section 1:
(a) "ACCOUNTS RECEIVABLE" means trade accounts receivable,
notes receivable and other rights to the payment of money, including any claim,
remedy or other right related to any returned and unpaid checks.
(b) "APPLICABLE LAW" OR "APPLICABLE LAWS" means any and all
laws, ordinances, constitutions, regulations, statutes, treaties, rules, codes,
licenses, certificates, franchises, permits, requirements and Orders adopted,
enacted, implemented, promulgated, issued, entered or deemed applicable by or
under the authority of any Governmental Body having jurisdiction over a
specified Person or any of such Person's properties or assets.
(c) "APPRAISER" has the meaning set forth in Section 9(b).
(d) "AVAILABLE MONEY" has the meaning set forth in the
recitals set forth above and includes any Subsidiary corporation or entities of
Available Money.
(e) "AVAILABLE MONEY CONTRACTS" has the meaning set forth in
Section 6(n).
(f) "AVAILABLE MONEY EMPLOYEE PLANS" has the meaning set forth
in Section 6(r)(i).
(g) "AVAILABLE MONEY FINANCIAL INFORMATION" has the meaning
set forth in Section 6(e).
(h) "AVAILABLE MONEY INTELLECTUAL PROPERTY" has the meaning
set forth in Section 6(l)(i).
(i) "AVAILABLE MONEY SHARE" means any share of the capital
stock of Available Money.
(j) "AVAILABLE MONEY TAX AFFILIATE" has the meaning set forth
in Section 6(g)(i).
(k) "BREACH" means any breach of, or any inaccuracy in, any
representation or warranty or any breach of, or failure to perform or comply
with, any covenant or obligation, in or of this Agreement or any other Contract.
(l) "BUSINESS" means Available Money's business of arranging
for the provision of ATM machines and related services to gaming and other
facilities.
(m) "BUSINESS DAY" means any day other than (a) Saturday or
Sunday or (b) any other day on which banks in California are permitted or
required to be closed.
(n) "BUYER" has the meaning given in the preamble above.
(o) "BUYER COMMON STOCK" means the common stock, par value
$.004 per share, of Buyer.
(p) "BUYER CONTRACTS" has the meaning set forth in Section
5(n).
(q) "BUYER'S COUNSEL" means Klehr, Harrison, Xxxxxx, Xxxxxxxxx
& Xxxxxx LLP, Philadelphia, Pennsylvania.
(r) "BUYER FINANCIAL INFORMATION" has the meaning set forth in
Section 5(e).
(s) "BUYER INTELLECTUAL PROPERTY" has the meaning set forth in
Section 5(l)(i).
(t) "BUYER SEC REPORTS" has the meaning set forth in Section
5(m).
(u) "BUYER TAX AFFILIATE" has the meaning set forth in Section
5(g).
(v) "CHEX ACQUISITION" has the meaning set forth in Section
2(a)(iii).
(w) "CLOSING" has the meaning set forth in Section 2(b) below.
(x) "CLOSING DATE" means the date on which the Closing
actually takes place.
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(y) "CODE" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations issued by the IRS pursuant to the
Internal Revenue Code or any successor law.
(z) "CONFIDENTIAL INFORMATION" means any information
pertaining to the business, operations, marketing, customers, financing,
forecasts and plans of any Party provided to or learned by any other Party
during the course of negotiation of the Contemplated Transactions. Information
shall be treated as Confidential Information whether such information has been
marked "confidential" or in a similar manner.
(aa) "CONSENT" means any approval, consent, ratification,
waiver or other authorization.
(bb) "CONTEMPLATED TRANSACTIONS" means all of the transactions
contemplated by the Transaction Documents.
(cc) "CONTRACT" means any agreement, contract, lease, license,
consensual obligation, promise, undertaking, understanding, commitment,
arrangement, instrument or document (whether written or oral and whether express
or implied), whether or not legally binding.
(dd) "CONTRACT PURCHASE PRICE REDUCTION" has the meaning set
forth in Section 7(f).
(ee) "COVENANT NOT TO COMPETE" means the Covenant Not to
Compete attached hereto as EXHIBIT B.
(ff) "DISCLOSURE SCHEDULES" means the disclosure schedules
delivered by each Party to the other Parties as required by this Agreement on
the date hereof and initialed by the Parties, as subsequently updated or
supplemented by the Parties prior to the Closing. The Disclosure Schedules will
be arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Agreement. The Disclosure Schedules shall be attached hereto
as EXHIBIT A and by reference made a part hereof.
(gg) "EFFECTIVE DATE" has the meaning set forth in Section
3(a).
(hh) "EMPLOYEE BENEFIT PLAN" has the meaning set forth in
ERISA Section 3(3).
(ii) "ENCUMBRANCE" means and includes:
(i) with respect to any personal property, any
security or other property interest or right, claim, lien, pledge, option,
charge, security interest, contingent or conditional sale, or other title claim
or retention agreement or lease or use agreement in the nature thereof, interest
or other right or claim of third parties, whether voluntarily incurred or
arising by operation of law, and including any agreement to grant or submit to
any of the foregoing in the future; and
(ii) with respect to any real property (whether and
including owned Real Property or leased Real Property), any mortgage, lien,
easement, interest, right-of-way, condemnation or eminent domain proceeding,
encroachment, any building, use or other form of restriction, encumbrance or
other claim (including adverse or prescriptive) or right of third parties
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(including Governmental Bodies), any lease or sublease, boundary dispute, and
agreements with respect to any real property including: purchase, sale, right of
first refusal, option, construction, building or property service, maintenance,
property management, conditional or contingent sale, use or occupancy, franchise
or concession, whether voluntarily incurred or arising by operation of law, and
including any agreement to grant or submit to any of the foregoing in the
future.
(jj) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, and the rules and regulations issued by the Department of
Labor pursuant to ERISA or any successor law.
(kk) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
(ll) "FINAL RETURNS" has the meaning set forth in Section
3(a).
(mm) "GAAP" means at any particular time generally accepted
accounting principles in the United States, consistently applied on a going
concern basis, using consistent audit scope and materiality standards.
(nn) "GOVERNING DOCUMENTS" means with respect to any
particular entity, the articles or certificate of incorporation and the bylaws;
all equityholders' agreements, voting agreements, voting trust agreements, joint
venture agreements, registration rights agreements or other agreements or
documents relating to the organization, management or operation of any Person or
relating to the rights, duties and obligations of the equityholders of any
Person; and any amendment or supplement to any of the foregoing.
(oo) "GOVERNMENTAL AUTHORIZATION" means any Consent, license,
registration or permit issued, granted, given or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal
Requirement.
(pp) "GOVERNMENTAL BODY" means: (i) nation, state, county,
city, town, borough, village, district, tribe or other jurisdiction; (ii)
federal, state, local, municipal, foreign, tribal or other government; (iii)
governmental or quasi-governmental authority of any nature (including any
agency, branch, department, board, commission, court, tribunal or other entity
exercising governmental or quasi-governmental powers); (iv) multinational
organization or body; (v) body exercising, or entitled or purporting to
exercise, any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power; or (vi) official of any of the
foregoing.
(qq) "IMPROVEMENTS" means all buildings, structures, fixtures
and improvements located on Land, including those under construction.
(rr) "IRS" means the United States Internal Revenue Service
and, the extent relevant, the United States Department of the Treasury.
(ss) "KNOWLEDGE" means actual knowledge without independent
investigation.
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(tt) "LAND" means all parcels and tracts of land in which any
Person has an ownership or leasehold interest.
(uu) "LEGAL REQUIREMENT" means any federal, state, local,
municipal, foreign, international, multinational or other constitution, law,
ordinance, principle of common law, code, regulation, statute or treaty,
including the Foreign Corrupt Practices Act, the violation of which would have a
Material Adverse Effect.
(vv) "MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE"
means, in connection with any Person, any event, change or effect that is
materially adverse, individually or in the aggregate, to the condition
(financial or otherwise), properties, assets, Liabilities, revenues, income,
business, operations, results of operations or prospects of such Person, taken
as a whole.
(ww) "MCA" means Money Centers of America, Inc.
(xx) "OPERATING INCOME" has the meaning set forth in Section
7(f).
(yy) "ORDER" means any writ, directive, order, injunction,
judgment, decree, ruling, assessment or arbitration award of any Governmental
Body or arbitrator.
(zz) "ORDINARY COURSE OF BUSINESS" means an action taken by a
Person will be deemed to have been taken in the Ordinary Course of Business only
if that action: (i) is consistent in nature, scope and magnitude with the past
practices of such Person and is taken in the ordinary course of the normal,
day-to-day operations of such Person; (ii) does not require authorization by the
board of directors or shareholders of such Person (or by any Person or group of
Persons exercising similar authority) and does not require any other separate or
special authorization of any nature; and (iii) is similar in nature, scope and
magnitude to actions customarily taken, without any separate or special
authorization, in the ordinary course of the normal, day-to-day operations of
other Persons that are in the same line of business as such Person.
(aaa) "PARTY" or "PARTIES" means Buyer, Xxxxxxxxxx, Available
Money and/or Sellers.
(bbb) "PERSON" means any individual, corporation, partnership,
business trust, limited liability company, limited liability partnership, joint
stock company, joint venture, trust, associated, unincorporated organization,
other entity or Governmental Body.
(ccc) "PROCEEDING" means any action, arbitration, audit,
hearing, investigation, litigation or suit (whether civil, criminal,
administrative, judicial or investigative, whether formal or informal, whether
public or private) commenced, brought, conducted or heard by or before, or
otherwise involving, any Governmental Body or arbitrator.
(ddd) "REAL PROPERTY" means any Land and Improvements and all
privileges, rights, easements, hereditaments and appurtenances belonging to or
for the benefit of any Land, including all easements appurtenant to and for the
benefit of any Land (a "DOMINANT PARCEL") for, and as the primary means of
access between, the Dominant Parcel and a public way, or for any other use upon
which lawful use of the Dominant Parcel for the purposes for which it is
presently being used is
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dependent, and all rights existing in and to any streets, alleys, passages and
other rights-of-way included thereon or adjacent thereto (before or after
vacation thereof) and vaults beneath any such streets.
(eee) "REAL PROPERTY LEASE" means any lease or rental
agreement pertaining to the occupancy of any improved space on any Land.
(fff) "RELATED PERSON" means with respect to any Person: (i)
any Person that directly or indirectly controls, is directly or indirectly
controlled by or is directly or indirectly under common control with such
specified Person; (ii) any Person that holds a Material Interest in such
specified Person; (iii) each Person that serves as a director, officer, partner,
executor or trustee of such specified Person (or in a similar capacity); (iv)
any Person in which such specified Person holds a Material Interest; and (v) any
Person with respect to which such specified Person serves as a general partner
or a trustee (or in a similar capacity).
For purposes of this definition, (a) "CONTROL" (including "controlling,"
"controlled by," and "under common control with") means the possession, direct
or indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, and shall be construed as such term is used in the rules
promulgated under the Securities Act; (b) the "FAMILY" of an individual includes
(i) the individual, (ii) the individual's spouse, (iii) any other natural person
who is related to the individual or the individual's spouse within the second
degree and (iv) any other natural person who resides with such individual; and
(c) "MATERIAL INTEREST" means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) of voting securities or other
voting interests representing at least ten percent (10%) of the outstanding
voting power of a Person or equity securities or other equity interests
representing at least ten percent (10%) of the outstanding equity securities or
equity interests in a Person.
(ggg) "REPRESENTATIVE" means with respect to a particular
Person, any director, officer, manager, employee, agent, consultant, advisor,
accountant, financial advisor, legal counsel or other representative of that
Person.
(hhh) "REVIEW PERIOD" has the meaning set forth in Section
9(a).
(iii) "SEC" means the United States Securities and Exchange
Commission.
(jjj) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(kkk) "SECURITY INTEREST" means any mortgage, pledge, security
interest, Encumbrance, charge, claim, or other lien, other than: (a) mechanic's,
materialmen's and similar liens; (b) liens for Taxes not yet due and payable or
for Taxes that the taxpayer is contesting in good faith through appropriate
Proceedings; (c) liens arising under worker's compensation, unemployment
insurance, social security, retirement and similar legislation; (d) liens
arising in connection with sales of foreign receivables; (e) liens on goods in
transit incurred pursuant to documentary letters of credit; (f) purchase money
liens and liens securing rental payments under capital lease arrangements; and
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(g) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
(lll) "SELLERS" has the meaning set forth in the preamble
above.
(mmm) "SELLER'S PRO RATA PORTION" has the meaning set forth in
Section 2(a)(i).
(nnn) "SUBSIDIARY" means with respect to any Person (the
"OWNER"), any corporation or other Person of which securities or other interests
having the power to elect a majority of that corporation's or other Person's
board of directors or similar governing body, or otherwise having the power to
direct the business and policies of that corporation or other Person (other than
securities or other interests having such power only upon the happening of a
contingency that has not occurred), are held by the Owner or one or more of its
Subsidiaries.
(ooo) "TANGIBLE PERSONAL PROPERTY" means all machinery,
equipment, tools, furniture, office equipment, computer hardware, supplies,
materials, vehicles and other items of tangible personal property of every kind
owned or leased by a Party (wherever located and whether or not carried on a
Party's books), together with any express or implied warranty by the
manufacturers or sellers or lessors of any item or component part thereof and
all maintenance records and other documents relating thereto.
(ppp) "TAX" or "TAXES" means, with respect to any person, (i)
all income taxes (including any tax on or based upon net income, gross income,
income as specially defined, earnings, profits or selected items of income,
earnings or profits) and all gross receipts, sales, use, ad valorem, transfer,
franchise, license, withholding, payroll, employment, excise, severance, stamp,
occupation, commercial rent, premium, property or windfall profit taxes,
alternative or add-on minimum taxes, customs duties and other taxes, fees,
assessments or charges of any kind whatsoever, together with all interest and
penalties, additions to tax and other additional amounts imposed by any taxing
authority (domestic or foreign) on such person (if any) and (ii) any liability
for the payment of any amount of the type described in clause (i) above as a
result of (A) being a "transferee" (within the meaning of Section 6901 of the
Code or any Applicable Law) of another person, (B) being a member of an
affiliated, combined or consolidated group or (C) a contractual arrangement or
otherwise.
(qqq) "TAX RETURN" means any return, declaration, report,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
(rrr) "THIRD PARTY" means a Person that is not a Party to this
Agreement.
(sss) "TRANSACTION DOCUMENTS" means this Agreement and all
other agreements, documents or instruments to be delivered pursuant to the
provisions hereof.
(ttt) "2004 CONTRACTS" has the meaning set forth in Section
6(n).
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2. PURCHASE AND SALE OF THE AVAILABLE MONEY SHARES. On and subject to
the terms and conditions of this Agreement, Buyer agrees to purchase from
Sellers, and Sellers agree to sell to Buyer, all of the issued and outstanding
Available Money Shares for total aggregate consideration of $6,000,000, payable
as specified below.
(a) Payment of the Purchase Price.
(i) At the Closing, Buyer shall pay to Sellers, pro
rata based on their respective holdings of Shares as set forth on Schedule 4(c)
(a "SELLER'S PRO RATA PORTION"), $2,000,000 in immediately available funds.
(ii) No later than 60 days following the Closing,
subject to Section 9 below, Buyer shall pay to each Seller his or her Seller's
Pro Rata Portion of an additional $2,000,000 in immediately available funds.
(iii) Within 30 days following the earlier of closing
by iGames on the acquisition of Chex Services, Inc. (the "CHEX ACQUISITION"),
termination of that proposed transaction or June 30, 2004, Buyer shall, at its
option (i) issue to each Seller his or her Seller's Pro Rata Portion of that
number of shares of Buyer Common Stock having a value, based on the average
closing ask price of the Buyer Common Stock for the ten (10) trading days
preceding the Closing Date (the "STOCK VALUATION"), of $2,000,000, or (ii) pay
to each Seller his or her Seller's Pro Rata Portion of an additional $2,000,000
in immediately available funds.
(b) The Closing. The closing of the Contemplated Transactions
(the "CLOSING") shall take place at such location, and at such time as the
parties hereto shall mutually agree at the earliest practicable time after the
satisfaction or waiver of the conditions set forth in Sections 7 and 9, but in
no event later than five (5) Business Days after the date that all of the
conditions of Sections 7 and 9 are satisfied or waived.
(c) Deliveries at Closing. At the Closing:
(i) Available Money and Sellers, as the case may be,
will deliver to Buyer:
(A) the stock certificates representing all
of the Available Money Shares, duly endorsed for transfer or accompanied by duly
executed stock powers endorsed in blank;
(B) the Covenants Not to Compete attached
hereto as EXHIBIT B, executed by Xxxxxx Xxxxx and Xxxxxx Freshman;
(C) a certificate of the Secretary of
Available Money certifying, as complete and accurate as of the Closing, attached
copies of the Governing Documents of Available Money, certifying and attaching
all requisite resolutions or actions of Available Money's board of directors
approving the execution and delivery of this Agreement and the other Transaction
Documents and the consummation of the Contemplated Transactions and certifying
to the incumbency and signatures of the
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officers of Available Money executing this Agreement and each of the other
Transaction Documents;
(D) certificates dated as of a date not
earlier than ten (10) days immediately preceding the Closing Date as to the good
standing of Available Money, executed by the appropriate officials of the State
of Nevada and each jurisdiction in which Available Money is licensed or
qualified to do business as a foreign corporation as specified in Schedule
6(a)(i); and
(E) such other documents relating to the
Contemplated Transactions as Buyer may reasonably request that are customary for
similar transactions.
(ii) Buyer will deliver to Sellers:
(A) the cash payments of the Purchase Price
due at Closing;
(B) a certificate of the Secretary of Buyer
certifying, as complete and accurate as of the Closing, attached copies of the
Governing Documents of Buyer, certifying and attaching all requisite resolutions
or actions of Buyer's board of directors approving the execution and delivery of
this Agreement and the other Transaction Documents and the consummation of the
Contemplated Transactions and certifying to the incumbency and signatures of the
officers of Buyer executing this Agreement and each of the other Transaction
Documents;
(C) certificate dated as of a date not
earlier than ten (10) days immediately preceding the Closing Date as to the good
standing of Buyer, executed by the appropriate officials of the its
incorporating state as specified in Schedule 5(a)(i); and
(D) such other documents relating to the
Contemplated Transactions as Sellers may reasonably request that are customary
for similar transactions.
(d) Excluded Assets and Liabilities. The Parties hereby agree
that (i) Sellers shall be entitled to receive and retain the book balance of all
bank accounts of Available Money on the close of business on December 31, 2003,
and all payments received by Available Money subsequent to the Closing Date that
relate to services rendered by Available Money through December 31, 2003,
provided that, Buyer shall have no obligation to pursue collection of any such
items and that all such efforts will be performed at Sellers' sole expense, and
(ii) Sellers shall be jointly and severally liable for all costs, liabilities,
damages or expenses incurred by Available Money arising out of services rendered
by Available Money or facts or events that occurred on or before December 31,
2003, less the amount of any insurance proceeds received by Available Money from
a claim filed under its insurance policies with respect to such costs,
liabilities, damages or expenses, plus all costs, obligations and expenses
related to the existing agreement between Available Money and Xxxxx Xxxxxx, an
independent contractor/salesperson, including any costs or obligations related
to the termination of such agreement.
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(e) Assignment of Claims. Buyer hereby assigns to Sellers all
rights, title and interest in and to all claims relating to or arising out of
services rendered by Available Money or facts or events that occurred on or
before December 31, 2003.
3. TAX MATTERS.
(a) Final Tax Returns. Prior to the date which is 45 days
prior to the due date of any of the following returns, including any extensions
of time, Sellers and Available Money shall, consistent with the terms of Section
3(d) and Sellers' past practice, prepare and submit to Buyer each Tax Return of
Sellers and Available Money for any taxable periods ending on or before the
close of business on December 31, 2003 (for purposes of this Section, the
"EFFECTIVE DATE"), for which returns have not been filed prior to the Effective
Date (the "Final RETURNS"). Buyer shall review such returns, and within 10
Business Days of Buyer's receipt of any such return, notify Sellers and
Available Money of any changes thereto desired by Buyer. Available Money and
Sellers shall make such changes as Buyer shall propose which are necessary to
make the Final Returns consistent with the agreements of the Parties as set
forth in this Section 3 and cause the Final Returns to be timely filed (which
timely filing may include all extensions to file as may be legally obtained by
Available Money and Sellers), and a copy thereof to be delivered to Buyer. Buyer
and Available Money shall cooperate with and assist tax advisors of Sellers, as
may be reasonably requested by Sellers in the preparation of data necessary for
filing any Tax Return of Available Money for any period including the Effective
Date and ending upon the close of business on the Effective Date to the extent
that such data is based on the operations of Available Money.
(b) Allocation of Income and Initial Available Money
Consolidated Tax Returns. Buyer shall be responsible for all Taxes of Available
Money for the activities and operations of Available Money occurring after the
close of business on the Effective Date. The taxable income or loss of Available
Money to be allocated to the periods or portions thereof including the Effective
Date and ending upon the close of business on the Effective Date shall be
determined by an actual closing of Available Money's books and records and not
on a pro-rata basis, except that real estate taxes and other taxes customarily
pro rated shall be pro rated.
(c) Consistent Reporting. Each of Available Money, Buyer and
Sellers agrees for all federal, state and local income and franchise tax
reporting purposes to report the consequences of the Contemplated Transactions
in a consistent manner (and consistent with any election or action, if
necessary, under any applicable state law).
(d) Tax Audits.
(i) In the event that any taxing authority shall
notify any Party of any investigation, inquiry or audit involving the federal or
state income Tax Returns of Available Money for a period including the Effective
Date and ending upon the close of business on the Effective Date, the notified
Party shall notify all other Parties. Sellers shall be responsible for and
assume the defense and control of all aspects of any such inquiry, investigation
or audit involving the Tax Returns of Available Money and Sellers for any period
including the Effective Date and ending upon the close of business on the
Effective Date, including all costs and expenses incurred by Sellers in
connection therewith; provided, that Sellers shall consult with Buyer with
respect to any such
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inquiry, investigation or audit that might affect Buyer for the taxable periods
ending after the Effective Date; and provided further that Sellers shall not
file any claims or amended returns, or enter into any final settlement or
closing agreement that may increase Taxes of Buyer or Available Money without
the consent of Buyer, which consent shall not be unreasonably withheld.
Available Money and Buyer shall make available such records and documents in
their possession as may be reasonably requested by Sellers or legally requested
by such taxing authority. Buyer and Available Money shall reasonably cooperate
with and assist Sellers and such taxing authority in the completion of such
inquiry, investigation or audit and shall advise Sellers of the commencement and
progress of any such audit following receipt of notice thereof by Available
Money.
(ii) In the event that any taxing authority shall
notify any Party of any investigation, inquiry or audit involving the Tax
Returns of Available Money for a period commencing after the close of business
on the Effective Date, the notified Party shall immediately notify all other
Parties. Buyer shall be responsible for and assume the defense and control of
all aspects of any such inquiry, investigation or audit, including all costs and
expenses incurred by Buyer in connection therewith. Sellers shall make available
to Buyer such records and documents in its possession as may be reasonably
requested by Buyer or legally requested by such taxing authority. Sellers shall
reasonably cooperate with and assist Buyer and Available Money and such taxing
authority in the completion of such inquiry, investigation or audit. Buyer and
Available Money shall be responsible for all costs and expenses incurred by them
in connection with any inquiry, investigation or audit involving the Tax Returns
of Available Money for any period commencing after the close of business on the
Effective Date. Buyer shall keep Sellers reasonably informed of the status of
any such investigation, inquiry or audit, including any settlement, appeal,
payment of sums due or other agreement arising out of such investigation,
inquiry or audit that could have a Material Adverse Effect on Sellers.
(e) Income Tax Indemnification.
(i) Sellers, jointly and severally, shall indemnify
and hold harmless, on an after tax basis, Buyer from and against any liability
for Taxes of Available Money, including any taxes imposed under Code Section
1374, resulting from the operations or activities of Available Money prior to
the Effective Date, or the manner in which Available Money or Sellers treated
certain items (including the making of any elections under the Code or
applicable state income tax provisions) for income tax purposes, prior to the
close of business on the Closing Date.
(ii) Buyer shall indemnify and hold harmless, on an
after tax basis, Sellers from and against any liability for Taxes of Available
Money, including any taxes imposed under Code Section 1374, resulting from the
operations or activities of Available Money after the Effective Date, or the
manner in which Available Money or Buyer treated certain items (including the
making of any elections under the Code or applicable state income tax
provisions) for income tax purposes, after the Closing Date.
(iii) Tax liabilities, other than income taxes,
subject to indemnification under Section 8, below, shall be governed by the
procedures set forth therein.
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4. REPRESENTATIONS OF SELLERS CONCERNING THE TRANSACTION. Each Seller
represents to Buyer, severally and not jointly, and solely as to himself or
herself, that the statements contained in this Section 4 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date was
substituted for the date of this Agreement throughout this Section 4).
(a) Each Seller is an adult individual with full power and
authority to own his or her properties (including without limitation Available
Money Shares), to manage his or her fiscal affairs and to enter into this
Agreement and each of the related agreements to which he or she is a party and
to agree to the transactions contemplated hereby and thereby and to perform all
of his or her obligations hereunder and thereunder. Neither Seller is subject to
any legal disability that would prevent him or her from performing under this
Agreement, and no order has been entered appointing a receiver for any Seller or
his or her assets. Each Seller, severally and not jointly, represents that there
is no claim, action, suit or proceeding (including, without limitation, current
investigations by governmental agencies) pending against him or her seeking to
enjoin the execution and delivery of this Agreement or consummation of the
transactions contemplated hereby.
(b) This Agreement and each of the related agreements to which
Sellers are parties constitute the legal, valid and binding obligations of
Sellers, enforceable against Sellers in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity).
(c) Each Seller owns that number of Shares set forth in
Schedule 4(c), which constitute all of the capital stock of Available Money
owned by Sellers. Except as described on Schedule 4(c), each Seller has good and
marketable title to all of the Available Money Shares set forth opposite such
Seller's name on Schedule 4(c), free and clear of all Encumbrances and
restrictions, legal or equitable, of every kind, except for restrictions on
transfer imposed by federal or state securities laws. Each Seller has full and
unrestricted legal right, power, and authority to sell, assign, and transfer the
Available Money Shares without obtaining the consent or approval of any other
person, entity, or Governmental Body (other than the consents described in
Schedule 4(c)) and the delivery of the Available Money Shares to Buyer pursuant
to this Agreement will transfer valid title thereto, free and clear of all
Encumbrances, claims, and restrictions of every kind, except for restrictions on
transferability imposed by federal and state securities laws. Each Seller hereby
waives, as of the Closing Date, all rights that exist pursuant to all
shareholder agreements and other contractual rights or charter document
provisions relating to the transferability of their respective Available Money
Shares, as and to the extent necessary to permit the consummation of the
transactions provided for herein.
(d) Noncontravention. Neither the execution and delivery of
this Agreement, nor consummation of the Contemplated Transactions, will:
(i) violate any Applicable Law, Legal Requirement,
Order, stipulation, charge or other restriction of any government, Governmental
Body or court to which either Seller is subject;
12
(ii) conflict with, result in a Breach of, constitute
a default under, result in the acceleration of, create in any Person the right
to accelerate, terminate, modify or cancel, or require any notice under any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest or other arrangement to which either Seller is a party or by which it
is bound or to which any of his or her assets is subject;
(iii) result in the creation or imposition of any
Encumbrance on any of the properties or assets of Available Money.
(e) Transfer of Available Money Shares. Each Seller is the
lawful owner of the Available Money Shares to be sold, transferred and delivered
by him or her to Buyer hereunder, free and clear of any restrictions on transfer
(other than any restrictions under the Securities Act or applicable state
securities laws), Taxes, Encumbrances, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims and demands. Other
than this Agreement, there are no outstanding or authorized options, warrants,
rights, contracts, calls, puts, rights to subscribe, conversion rights or other
agreements or commitments providing for the disposition or acquisition of any
Available Money Shares or other equity interest in Available Money. The
Available Money Shares to be sold, transferred and delivered to Buyer hereunder
represent all of the issued and outstanding capital stock of Available Money.
(f) Brokers' Fees. Sellers do not have any liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement for which Available
Money, Buyer or Sellers could become liable or obligated. This section excludes
any fees that may have been or be incurred for financial advisement services,
which shall be the sole obligation of Sellers.
5. REPRESENTATIONS OF BUYER CONCERNING THE TRANSACTION. Buyer, with
respect to all aspects of its business, and Xxxxxxxxxx, solely with respect to
MCA and not with respect to any other aspect of Buyer's business, represents to
Sellers and Available Money that the statements contained in this Section 5 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date was substituted for the date of this Agreement throughout this Section 5).
(a) Organization and Good Standing.
(i) Buyer is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation. Buyer is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each state or other jurisdiction in
which either the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such qualification and the
failure to be so qualified would have a Material Adverse Effect on Buyer.
Schedule 5(a)(i) contains a complete and accurate list of every jurisdiction in
which Buyer is qualified to do business.
(ii) Buyer has no Subsidiary and does not own any
shares of capital stock or other securities of any other Person, other than as
set forth on Schedule 5(a)(ii).
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(b) Authorization of Transaction. Buyer has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of Buyer, enforceable in
accordance with its terms and conditions, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity). Buyer is not
required to give any notice to, make any filing with or obtain any
authorization, Consent or approval of any Governmental Body in order to
consummate the Contemplated Transactions except for any filings pursuant to the
Securities Act, which may be required following the Contemplated Transactions.
(c) Capitalization of Buyer. Subject to amendment of the
appropriate Governing Documents of Buyer upon approval by majority written
consent of Buyer's stockholders and delivery of an information statement to
Buyer's stockholders who do not consent to such amendment, the entire authorized
capital stock of Buyer consists of 12,500,000 shares of common stock, par value
$0.004 per share, of which 3,961,303 shares are issued and outstanding (and
approximately 50,000,000 shares will be issued and outstanding following the
Chex Acquisition), and 5,000,000 shares of preferred stock, par value $0.004 per
share, of which 1,351,640 are designated Series A Preferred Stock and are issued
and outstanding. All of Buyer's issued and outstanding shares of capital stock
have been duly authorized, are validly issued, fully paid and nonassessable.
Other than this Agreement and as disclosed on Schedule 5(c), there are no
outstanding or authorized options, warrants, rights, contracts, calls, puts,
rights to subscribe, conversion rights or other agreements or commitments to
which Buyer is a party or which are binding upon Buyer providing for the
issuance, disposition or acquisition of any of its capital stock, nor any
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to Buyer.
(d) Noncontravention. Neither the execution and delivery of
this Agreement, nor consummation of the Contemplated Transactions, will:
(i) violate any Applicable Law, Legal Requirement,
Order, stipulation, charge or other restriction of any Governmental Body or
court to which Buyer is subject or any provision of its Governing Documents; or
(ii) conflict with, result in a Breach of, constitute
a default under, result in the acceleration of, create in any Person the right
to accelerate, terminate, modify or cancel, or require any notice under any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest, or other arrangement to which Buyer is a party or by which it is bound
or to which any of its assets is subject.
(e) Buyer Financial Information. Schedule 5(e) shall include
the following financial information (collectively, the "BUYER FINANCIAL
INFORMATION"): audited balance sheet and statements of income, changes in
stockholders' equity and cash flow of MCA as of and for the twelve months ended
September 30, 2003.
14
(f) Events Subsequent to Buyer Balance Sheet Date. Since
September 30, 2003 (the "BUYER BALANCE SHEET DATE"), and except as disclosed on
Schedule 5(f), there has not been, occurred or arisen, with respect to Buyer:
(i) any change or amendment in its Governing
Documents;
(ii) any reclassification, split up or other change
in, or amendment of or modification to, the rights of the holders of any of its
capital stock;
(iii) any direct or indirect redemption, purchase or
acquisition by any Person of any of its capital stock or of any interest in or
right to acquire any such stock;
(iv) other than in connection with the acquisition of
MCA, any issuance, sale, or other disposition of any capital stock, or any grant
of any options, warrants, or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any capital stock;
(v) any declaration, set aside, or payment of any
dividend or any distribution with respect to its capital stock (whether in cash
or in kind) or any redemption, purchase, or other acquisition of any of its
capital stock;
(vi) the organization of any Subsidiary or the
acquisition of any shares of capital stock by any Person or any equity or
ownership interest in any business;
(vii) any damage, destruction or loss of any of the
its properties or assets whether or not covered by insurance;
(viii) any sale, lease, transfer, or assignment of
any of its assets, tangible or intangible, other than for a fair consideration
in the Ordinary Course of Business;
(ix) other than in connection with the acquisition of
MCA, the execution of, or any other commitment to any agreement, contract,
lease, or license (or series of related agreements, contracts, leases, and
licenses) outside the Ordinary Course of Business;
(x) any acceleration, termination, modification, or
cancellation of any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses), involving more than $10,000 to
which it is a party or by which it is bound;
(xi) any Security Interest or Encumbrance imposed
upon any of its assets, tangible or intangible;
(xii) any grant of any license or sublicense of any
rights under or with respect to any Buyer Intellectual Property;
(xiii) any sale, assignment or transfer (including
transfers to any employees, affiliates or shareholders) of any Buyer
Intellectual Property;
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(xiv) any capital expenditure (or series of related
capital expenditures) involving more than $10,000 and outside the Ordinary
Course of Business;
(xv) any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person (or series of
related capital investments, loans, and acquisitions) involving more than
$10,000 and outside the Ordinary Course of Business;
(xvi) any issuance of any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation involving more than $10,000;
(xvii) any delay or postponement of the payment of
accounts payable or other liabilities, other than those being contested in good
faith as set forth in Schedule 5(f)(xvii);
(xviii) any cancellation, compromise, waiver, or
release of any right or claim (or series of related rights and claims) involving
more than $10,000 and outside the Ordinary Course of Business;
(xix) any loan to, or any entrance into any other
transaction with, any of its directors, officers, and employees;
(xx) the adoption, amendment, modification, or
termination of any bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors, officers, and
employees (or taken away any such action with respect to any other Employee
Benefit Plan);
(xxi) any employment contract or collective
bargaining agreement, written or oral, or modified the terms of any existing
such contract or agreement;
(xxii) any increase in the base compensation of any
of its directors, officers, and employees;
(xxiii) any charitable or other capital contribution
in excess of $2,500;
(xxiv) any taking of other action or entrance into
any other transaction other than in the Ordinary Course of Business, or entrance
into any transaction with any insider of Buyer, except as disclosed in this
Agreement and the Disclosure Schedules;
(xxv) any other event or occurrence that may have or
could reasonably be expected to have an Material Adverse Effect on Buyer
(whether or not similar to any of the foregoing); or
(xxvi) any agreement or commitment, whether in
writing or otherwise, to do any of the foregoing other than in connection with
the acquisition of MCA or the hiring of Xxxxx Xxxxxxxxxx as Chief Executive
Officer of Buyer.
16
(g) Tax Matters.
(i) Except as set forth on Schedule 5(g)(i): (i)
Buyer and (ii) each other Person included in any consolidated or combined Tax
Return and part of an affiliated group, within the meaning of Section 1504 of
the buyer Code, of which Buyer is or has been a member ("BUYER TAX AFFILIATE"),
for the years that it was a Buyer Tax Affiliate of Buyer:
(A) has timely paid or caused to be paid all
Taxes required to be paid by it though the date hereof and as of the Closing
Date (including any Taxes shown due on any Tax Return);
(B) has filed or caused to be filed in a
timely and proper manner (within any applicable extension periods) all Tax
Returns required to be filed by it with the appropriate Governmental Body in all
jurisdictions in which such Tax Returns are required to be filed; and all tax
returns filed on behalf of Buyer and each Buyer Tax Affiliate were completed and
correct in all material respects; and
(C) has not requested or caused to be
requested any extension of time within which to file any Tax Return, which Tax
Return has not since been filed.
(ii) Except as set forth in Schedule 5(g)(ii):
(A) since January 1, 2000, neither Buyer nor
any Buyer Tax Affiliate (for the years that it was a Buyer Tax Affiliate) has
been notified by the IRS or any other Governmental Body that any issues have
been raised (and no such issues are currently pending) by the IRS or any other
Governmental Body in connection with any Tax Return filed by or on behalf of
Buyer or any Buyer Tax Affiliate; there are no pending Tax audits and no waivers
of statutes of limitations have been given or requested with respect to Buyer or
any Buyer Tax Affiliate (for years that it was a Buyer Tax Affiliate); no Tax
liens have been filed against Buyer or unresolved deficiencies or additions to
Taxes have been proposed, asserted or assessed against Buyer or any Buyer Tax
Affiliate (for the years that it was a Buyer Tax Affiliate);
(B) full and adequate accrual has been made
((i)) on the Buyer Balance Sheet, and the books and records of Buyer and each of
its Subsidiaries for all income taxes currently due and all accrued Taxes not
yet due and payable by Buyer and each of its Subsidiaries, respectively, as if
they were stand-alone corporations for all periods ending on or prior to the
Buyer Balance Sheet Date, and ((ii)) on the books and records of Buyer and each
of its Subsidiaries for all Taxes payable by Buyer and each of its Subsidiaries,
respectively, as if they were stand-alone corporations for all periods beginning
after the Buyer Balance Sheet Date;
(C) neither Buyer nor any of its
Subsidiaries has incurred any Liability for Taxes from and after the Buyer
Balance Sheet Date other than Taxes incurred in the Ordinary Course of Business
and consistent with past practices;
17
(D) neither Buyer nor any of its
Subsidiaries has ((i)) made an election (or had an election made on its behalf
by another person) to be treated as a "consenting corporation" under Section
341(f) of the Code or ((ii)) a "personal holding company" within the meaning of
Section 542 of the Code;
(E) Buyer and each of its Subsidiaries has
complied in all material respects with all Applicable Laws relating to the
collection or withholding of Taxes (such as Taxes or withholding of Taxes from
the wages of employees);
(F) neither Buyer nor any of its
Subsidiaries has any liability in respect of any Tax sharing agreement with any
Person and all Tax sharing agreements to which either Buyer or any of its
Subsidiaries has been bound have been terminated;
(G) neither Buyer nor any of its
Subsidiaries has incurred any Liability to make any payments either alone or in
conjunction with any other payments that:
(1) shall be non-deductible under,
or would otherwise constitute a "parachute payment" within the meaning of
Section 280G of the Code (or any corresponding provision of state local or
foreign income Tax Law); or
(2) are or may be subject to the
imposition of an excise Tax under Section 4999 of the Code;
(H) neither Buyer nor any of its
Subsidiaries has agreed to (nor has any other Person agreed to on its behalf)
and is not required to make any adjustments or changes on, before or after the
Closing Date, to its accounting methods pursuant to Section 481 of the Code, and
the IRS has not proposed any such adjustments or changes in the accounting
methods of Buyer;
(I) no claim has been made within the last
three years by any taxing authority in a jurisdiction in which Buyer or any of
its Subsidiaries does not file Tax Returns that Buyer or any such Subsidiary is
or may be subject to taxation by that jurisdiction;
(J) the consummation of the Contemplated
Transactions will not trigger the realization or recognition of intercompany
gain or income to Buyer under the Federal consolidated return regulations with
respect to Federal, state or local taxes;
(h) Title to Assets. Buyer has good and marketable title to,
or a valid leasehold interest in, the properties and assets owned or leased and
used by it to operate the business in the manner presently operated by Buyer, as
reflected in Buyer Financial Information.
(i) Real Property. Buyer does not own or hold an ownership
interest in any Real Property.
18
(j) Leased Real Property. Schedule 5(j) contains a correct
legal description, street address and tax parcel identification number of all
tracts, parcels and subdivided lots in which Buyer has a leasehold interest and
an accurate description (by location, name of lessor, date of lease and term
expiration date) of all Real Property Leases pursuant to which Buyer has a
leasehold interest.
(k) Condition of Facilities.
(i) Use of the Real Property of Buyer for the various
purposes for which it is presently being used is permitted as of right under all
applicable zoning Legal Requirements and is not subject to "permitted
nonconforming" use or structure classifications. All Improvements are in
compliance with all applicable Legal Requirements, including those pertaining to
zoning, building and the disabled, are in good repair and in good condition,
ordinary wear and tear excepted, and are free from latent and patent defects. To
the Knowledge of Buyer, no part of any Improvement encroaches on any real
property not included in the Real Property of Buyer, and there are no buildings,
structures, fixtures or other Improvements primarily situated on adjoining
property which encroach on any part of the Land.
(ii) Each item of Tangible Personal Property is in
good repair and good operating condition, ordinary wear and tear excepted, is
suitable for immediate use in the Ordinary Course of Business and is free from
latent and patent defects. No item of Tangible Personal Property is in need of
repair or replacement other than as part of routine maintenance in the Ordinary
Course of Business. Except as disclosed in Schedule 5(k)(ii), all Tangible
Personal Property used in the Business is in the possession of Buyer.
(l) Buyer Intellectual Property.
(i) Buyer owns, or is licensed or otherwise possesses
legal enforceable rights to use all: (i) trademarks and service marks
(registered or unregistered), trade dress, trade names and other names and
slogans embodying business goodwill or indications of origin, all applications
or registrations in any jurisdiction pertaining to the foregoing and all
goodwill associated therewith; (ii) patentable inventions, technology, computer
programs and software (including password unprotected interpretive code or
source code, object code, development documentation, programming tools,
drawings, specifications and data) and all applications and patents in any
jurisdiction pertaining to the foregoing, including re-issues, continuations,
divisions, continuations-in-part, renewals or extensions; (iii) trade secrets,
including confidential and other non-public information (iv) copyrights in
writings, designs, software programs, mask works or other works, applications or
registrations in any jurisdiction for the foregoing and all moral rights related
thereto; (v) databases and all database rights; and (vi) Internet Web sites,
domain names and applications and registrations pertaining thereto
(collectively, "BUYER INTELLECTUAL PROPERTY") that are used in its business
except for any such failures to own, be licensed or process that would not be
reasonably likely to have a Material Adverse Effect.
(ii) Except as may be evidenced by patents issued
after the date hereof, there are no conflicts with or infringements of any
material Buyer Intellectual Property by any Third Party and the conduct of the
businesses as currently conducted does not conflict with or infringe any
proprietary right of a Third Party.
19
(iii) Schedule 5(l)(iii) sets forth a complete list
of all patents, registrations and applications pertaining to Buyer Intellectual
Property owned by Buyer. Except as set forth on Schedule 5(m)(iii), all such
Buyer Intellectual Property listed is owned by Buyer, free and clear of liens or
Encumbrances of any nature.
(iv) Schedule 5(l)(iv) sets forth a complete list of
all material licenses, sublicenses and other agreements in which Buyer has
granted rights to any person to use Buyer Intellectual Property. Buyer will not,
as a result of the execution and delivery of this Agreement or the performance
of its obligations under this Agreement, be in Breach of any license, sublicense
or other agreement relating to Buyer Intellectual Property.
(v) Buyer owns or has the right to use all software
currently used in and material to its business.
(m) SEC Reports and Financial Statements. Since April 4, 2002,
Buyer has filed with the SEC all reports and other filings required to be filed
by Buyer in accordance with the Securities Act and the Exchange Act and the
rules and regulations promulgated thereunder (the "BUYER SEC REPORTS"). As of
their respective dates, Buyer SEC Reports complied in all material respects with
the applicable requirements of the Securities Act, the Exchange Act and the
respective rules and regulations promulgated thereunder applicable to such Buyer
SEC Reports and, except to the extent that information contained in any Buyer
SEC Report has been revised or superseded by a later Buyer SEC Report filed and
publicly available prior to the date of this Agreement, none of Buyer SEC
Reports contained any untrue statement of a material fact or omitted to state
any 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. The financial statements of Buyer included in Buyer SEC
Reports were prepared from and are in accordance with the accounting books and
other financial records of Buyer, were prepared in accordance with GAAP (except,
in the case of unaudited statements, as permitted by the rules of the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and presented fairly the consolidated financial
position of Buyer and its consolidated subsidiaries as of the dates thereof and
the consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in Buyer SEC Reports, Buyer has no liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) other than liabilities or obligations incurred in the Ordinary Course
of Business. Buyer SEC Reports accurately disclose (i) the terms and provisions
of all stock option plans, (ii) transactions with affiliates, and (iii) all
material contracts required to be disclosed pursuant to Item 601(b)(10) of
Regulation S-B promulgated by the SEC.
(n) Contracts. Schedule 5(n) is a true, complete and accurate
list of all written or oral contracts, understandings, agreements and other
arrangements (including a brief description of all such oral arrangements)
executed by an officer or duly authorized employee of Buyer or to which Buyer is
a party either:
(i) involving more than $10,000, or
20
(ii) in the nature of a collective bargaining
agreement, employment agreement, or severance agreement with any of its
directors, officers and employees.
Buyer has delivered or will, prior to Closing, deliver to Sellers and Available
Money a correct and complete copy of each contract, agreement (redacted copies
for names are acceptable), and other written arrangement listed in Schedule 5(n)
(the "BUYER CONTRACTS"). Except as disclosed in Schedule 5(n): (i) Buyer has
fully complied with all material terms of Buyer Contracts; (ii) to the Knowledge
of Buyer, other parties to Buyer Contracts have fully complied with the terms of
Buyer Contracts; and (iii) there are no disputes or complaints with respect to
nor has Buyer received any notices (whether oral or in writing) that any other
party to Buyer Contracts is terminating, intends to terminate or is considering
terminating, any of Buyer Contracts listed or required to be listed in Schedule
5(n).
(o) Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of Buyer.
(p) Litigation.
(i) Except as set forth in Schedule 5(p)(i), there is
no pending or, to Buyer's Knowledge, threatened Proceeding:
(A) by or against Buyer or that otherwise
relates to or may affect its business which, if adversely determined, would have
a Material Adverse Effect; or
(B) that challenges, or that may have the
effect of preventing, delaying, making illegal or otherwise interfering with,
any of the Contemplated Transactions.
To the Knowledge of Buyer, no event has occurred or circumstance exists that is
reasonably likely to give rise to or serve as a basis for the commencement of
any such Proceeding. Buyer has delivered to Sellers and Available Money copies
of all pleadings, correspondence and other documents relating to each Proceeding
listed in Schedule 5(p)(i). There are no Proceedings listed or required to be
listed in Schedule 5(p)(i) that could reasonably be expected to have a Material
Adverse Effect.
(ii) Except as set forth in Schedule 5(p)(ii):
(A) there is no material Order to which
Buyer or its business is subject; and
(B) to the Knowledge of Buyer, no officer,
director, agent or employee of Buyer is subject to any Order that prohibits such
officer, director, agent or employee from engaging in or continuing any conduct,
activity or practice relating to its business.
(iii) Except as set forth in Schedule 5(p)(iii):
(A) Buyer has been and is in compliance with
all of the terms and requirements of each Order to which it or its business is
or has been subject;
21
(B) No event has occurred or circumstance
exists that is reasonably likely to constitute or result in (with or without
notice or lapse of time) a violation of or failure to comply with any term or
requirement of any Order to which Buyer or its business is subject; and
(C) Buyer has not received any notice, or
received but subsequently resolved to the satisfaction of the Governmental Body
or other Person (evidence of such approval is attached as Schedule 5(p)(iii), or
other communication (whether oral or written) from any Governmental Body or any
other Person regarding any actual, alleged, possible or potential violation of,
or failure to comply with, any term or requirement of any Order to which Buyer
or its business is subject.
(q) Legal Compliance.
(i) To the Knowledge of Buyer, Buyer is in material
compliance with all Applicable Laws of any Governmental Bodies having
jurisdiction over Buyer, including any requirements relating to antitrust,
consumer protection, currency exchange, equal opportunity, health, occupational
safety, pension and securities matters.
(ii) Schedule 5(q)(ii) contains a complete and
accurate list of each Governmental Authorization that is held by Buyer or that
otherwise relates to its business. Each Governmental Authorization listed or
required to be listed in Schedule 5(q)(ii) is valid and in full force and
effect. The Governmental Authorizations listed in Schedule 5(q)(ii) collectively
constitute all of the Governmental Authorizations necessary to permit Buyer to
lawfully conduct and operate its business.
(r) Brokers' Fees. Buyer has no liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
Contemplated Transactions for which Available Money, Buyer or Sellers could
become liable or obligated.
(s) Undisclosed Liabilities. To the Knowledge of Buyer, it has
no liability (and to the Knowledge of Buyer, there is no basis for any present
or future action, suit, Proceeding, hearing, investigation, charge, complaint,
claim, or demand against any of them giving rise to any liability), except for
(i) liabilities reflected or reserved against in the
Buyer Balance Sheet; or
(ii) liabilities that have arisen in the Ordinary
Course of Business since the date of Buyer Balance Sheet.
(t) Disclosure. The representations and warranties of Buyer
contained in this Agreement do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements and information contained herein not misleading.
22
6. REPRESENTATIONS CONCERNING AVAILABLE MONEY. Sellers represent and
warrant to Buyer that the statements contained in this Section 6 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 6), except as
set forth in the schedules to be provided.
(a) Organization and Good Standing.
(i) Available Money is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation. Except as set forth on Schedule 6(a)(i), Available Money is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each state or other jurisdiction in which either the ownership or
use of the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification and the failure to be so qualified
would have a Material Adverse Effect on Available Money. Schedule 6(a)(i)
contains a complete and accurate list of every jurisdiction in which Available
Money is qualified to do business.
(ii) Available Money has no Subsidiary and does not
own any shares of capital stock or other securities of any other Person, other
than as set forth on Schedule 6(a)(ii).
(b) Corporate Documents. Schedule 6(b) shall consist of true
and correct copies of:
(i) the Articles or Certificate of Incorporation, as
amended, and the Bylaws, as amended, of Available Money;
(ii) the minute book of Available Money containing
all existing records of all Proceedings, Consents, actions and meetings of the
shareholders and Board of Directors of Available Money; and
(iii) the stock transfer ledger of Available Money
and a shareholder list setting forth all owners of the capital stock of
Available Money as they appear in the stock transfer ledger of Available Money.
(c) Capitalization of Available Money. The entire authorized
capital stock of Available Money consists of Seventy-Five Thousand (75,000)
shares of common stock having a par value of $1.00 per share, of which Two
Hundred (200) shares are issued and outstanding. All of Available Money's issued
and outstanding shares of common stock have been duly authorized, are validly
issued, fully paid and nonassessable, and are held of record by Sellers as set
forth on Schedule 6(c). Other than this Agreement, there are no outstanding or
authorized options, warrants, rights, contracts, calls, puts, rights to
subscribe, conversion rights or other agreements or commitments to which
Available Money is a party or which are binding upon Available Money providing
for the issuance, disposition or acquisition of any of its capital stock, nor
any outstanding or authorized stock appreciation, phantom stock or similar
rights with respect to Available Money.
(d) Noncontravention. Neither the execution and delivery of
this Agreement, nor consummation of the Contemplated Transactions, by Available
Money will:
23
(i) violate any Applicable Law, Legal Requirement,
Order, stipulation, charge or other restriction of any Governmental Body or
court to which Available Money is subject or any provision of its Governing
Documents; or
(ii) conflict with, result in a Breach of, constitute
a default under, result in the acceleration of, create in any Person the right
to accelerate, terminate, modify or cancel, or require any notice under any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest or other arrangement to which Available Money is a party or by which it
is bound or to which any of its assets is subject (or result in the imposition
of any Security Interest upon any of its assets), except where the violation,
conflict, Breach, default, acceleration, termination, modification,
cancellation, failure to give notice, or Security Interest would not have a
Material Adverse Effect on the financial condition of Available Money or on the
ability of the Parties to consummate the Contemplated Transactions. Available
Money does not need to give any notice to, make any filing with, or obtain any
authorization, Consent, or approval of any government or governmental agency in
order for the Parties to consummate the Contemplated Transactions.
(e) Available Money Financial Information. Within forty-five
(45) days of the date of this Agreement, Sellers shall cause to be prepared and
delivered to Buyer at their sole cost and expense, the following financial
information, certified by an independent accountant (in the event that Buyer is
required to engage the independent accountant, then Sellers shall be obligated
to reimburse Buyer for all costs and expenses related to such engagement), as
Schedule 6(e) hereto (collectively, the "AVAILABLE MONEY FINANCIAL
INFORMATION"): audited balance sheets and statements of income, changes in
stockholders' equity and cash flow as of and for the twelve month periods ended
December 31, 2003 and December 31, 2002 for Available Money. The Available Money
Financial Information, when presented to Buyer, will present fairly the
financial condition of Available Money as of such dates and the results of
operations of Available Money for such periods, in accordance with GAAP and are
consistent with the books and records of Available Money (which books and
records are correct and complete).
(f) Subsequent Events. Since December 31, 2002, and except as
disclosed on Schedule 6(f) or in an audit report delivered to Buyer within
forty-five (45) days of the Closing Date, there has not been, occurred or
arisen, with respect to Available Money:
(i) any change or amendment in its Governing
Documents;
(ii) any reclassification, split up or other change
in, or amendment of or modification to, the rights of the holders of any of its
capital stock;
(iii) any direct or indirect redemption, purchase or
acquisition by any Person of any of its capital stock or of any interest in or
right to acquire any such stock;
(iv) any issuance, sale, or other disposition of any
capital stock, or any grant of any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any
capital stock;
24
(v) any declaration, set aside, or payment of any
dividend or any distribution with respect to its capital stock (whether in cash
or in kind) or any redemption, purchase, or other acquisition of any of its
capital stock;
(vi) the organization of any Subsidiary or the
acquisition of any shares of capital stock by any Person or any equity or
ownership interest in any business;
(vii) any material amount of damage, destruction or
loss of any of its properties or assets whether or not covered by insurance;
(viii) any sale, lease, transfer, or assignment of
any of its assets, tangible or intangible, other than for a fair consideration
in the Ordinary Course of Business;
(ix) the execution of, or any other commitment to any
agreement, contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) outside the Ordinary Course of Business;
(x) any acceleration, termination, modification, or
cancellation of any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) involving more than $10,000 to
which it is a party or by which it is bound;
(xi) any Security Interest or Encumbrance imposed
upon any of its assets, tangible or intangible;
(xii) any grant of any license or sublicense of any
rights under or with respect to any Available Money Intellectual Property;
(xiii) any sale, assignment or transfer (including
transfers to any employees, affiliates or shareholders) of any Available Money
Intellectual Property;
(xiv) any capital expenditure (or series of related
capital expenditures) involving more than $10,000 and outside the Ordinary
Course of Business;
(xv) any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person (or series of
related capital investments, loans, and acquisitions) involving more than
$10,000 and outside the Ordinary Course of Business;
(xvi) any issuance of any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation involving more than $10,000;
(xvii) any delay or postponement of the payment of
accounts payable or other liabilities, other than those being contested in good
faith as set forth in Schedule 6(f)(xvii);
(xviii) any cancellation, compromise, waiver, or
release of any right or claim (or series of related rights and claims) involving
more than $10,000 and outside the Ordinary Course of Business;
25
(xix) any loan to, or any entrance into any other
transaction with, any of its directors, officers, and employees either involving
more than $500 singly or $2,500 in the aggregate;
(xx) the adoption, amendment, modification, or
termination of any bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors, officers, and
employees (or taken away any such action with respect to any other Employee
Benefit Plan);
(xxi) any employment contract or collective
bargaining agreement, written or oral, or modified the terms of any existing
such contract or agreement;
(xxii) any increase in the base compensation of any
of its directors, officers, and employees;
(xxiii) any charitable or other capital contribution
outside the Ordinary Course of Business in excess of $2,500;
(xxiv) any taking of other action or entrance into
any other transaction other than in the Ordinary Course of Business, or entrance
into any transaction with any insider of Available Money, except as disclosed in
this Agreement and the Disclosure Schedules;
(xxv) any other event or occurrence that may have or
could reasonably be expected to have a Material Adverse Effect on Available
Money (whether or not similar to any of the foregoing); or
(xxvi) any agreement or commitment, whether in
writing or otherwise, to do any of the foregoing.
(g) Tax Matters.
(i) Except as set forth on Schedule 6(g)(i): (i)
Available Money and (ii) each other Person included in any consolidated or
combined Tax Return and part of an affiliated group, within the meaning of
Section 1504 of the Code, of which Available Money is or has been a member
("AVAILABLE MONEY TAX AFFILIATE"), for the years that it was a Tax Affiliate of
Available Money:
(A) has timely paid or caused to be paid all
Taxes required to be paid by it though the date hereof and as of the Closing
Date (including any Taxes shown due on any Tax Return);
(B) has filed or caused to be filed in a
timely and proper manner (within any applicable extension periods) all Tax
Returns required to be filed by it with the appropriate Governmental Body in all
jurisdictions in which such Tax Returns are required to be filed; and all tax
returns filed on behalf of Available Money and each Available Money Tax
Affiliate were completed and correct in all material respects; and
(C) has not requested or caused to be
requested any extension of time within which to file any Tax Return, which Tax
Return has not since been filed.
26
(ii) Available Money has previously delivered true,
correct and complete copies of all Federal Tax Returns filed by or on behalf of
Available Money through the date hereof for the periods ending after December
31, 1999.
(iii) Except as set forth in Schedule 6(g)(iii):
(A) since January 1, 2000, neither Available
Money nor any Available Money Tax Affiliate (for the years that it was a
Available Money Tax Affiliate) has been notified by the Internal Revenue Service
or any other Governmental Body that any issues have been raised (and no such
issues are currently pending) by the IRS or any other Governmental Body in
connection with any Tax Return filed by or on behalf of Available Money or any
Available Money Tax Affiliate; there are no pending Tax audits and no waivers of
statutes of limitations have been given or requested with respect to Available
Money or any Available Money Tax Affiliate (for years that it was a Available
Money Tax Affiliate); no Tax liens have been filed against Available Money or
unresolved deficiencies or additions to Taxes have been proposed, asserted or
assessed against Available Money or any Available Money Tax Affiliate (for the
years that it was a Available Money Tax Affiliate);
(B) full and adequate accrual has been made
(i) in the Available Money Financial Information, and the books and records of
Available Money for all income taxes currently due and all accrued Taxes not yet
due and payable by Available Money for all periods ending on or prior to
December 31, 2003, and (ii) on the books and records of Available Money and each
of its Subsidiaries for all Taxes payable by Available Money for all periods
beginning after January 1, 2002;
(C) Available Money has not incurred any
Liability for Taxes from and after December 31, 2003 other than Taxes incurred
in the Ordinary Course of Business and consistent with past practices;
(D) neither Available Money nor any of its
Subsidiaries has (i) made an election (or had an election made on its behalf by
another person) to be treated as a "consenting corporation" under Section 341(f)
of the Code or (ii) a "personal holding company" within the meaning of Section
542 of the Code;
(E) Available Money and each of its
Subsidiaries has complied in all material respects with all Applicable Laws
relating to the collection or withholding of Taxes (such as Taxes or withholding
of Taxes from the wages of employees);
(F) neither Available Money nor any of its
Subsidiaries has any liability in respect of any Tax sharing agreement with any
Person and all Tax sharing agreements to which either Available Money or any of
its Subsidiaries has been bound have been terminated;
27
(G) neither Available Money nor any of its
Subsidiaries has incurred any Liability to make any payments either alone or in
conjunction with any other payments that:
(1) shall be non-deductible under,
or would otherwise constitute a "parachute payment" within the meaning of
Section 280G of the Code (or any corresponding provision of state local or
foreign income Tax Law); or
(2) are or may be subject to the
imposition of an excise Tax under Section 4999 of the Code;
(H) neither Available Money nor any of its
Subsidiaries has agreed to (nor has any other Person agreed to on its behalf)
and is not required to make any adjustments or changes on, before or after the
Closing Date, to its accounting methods pursuant to Section 481 of the Code, and
the IRS has not proposed any such adjustments or changes in the accounting
methods of Available Money;
(I) no claim has been made within the last
three years by any taxing authority in a jurisdiction in which Available Money
or any of its Subsidiaries does not file Tax Returns that Available Money or any
such Subsidiary is or may be subject to taxation by that jurisdiction;
(iv) Available Money has been a Subchapter "S"
corporation for federal income Tax purposes since its formation and has had
valid elections in place to be treated as a Subchapter "S" corporation or
similar status under the income tax laws of the State of California.
(h) Title to Assets. Available Money has good and marketable
title to, or a valid leasehold interest in, the properties and assets owned or
leased and used by it to operate the Business in the manner presently operated
by Available Money, as reflected in the Available Money Financial Information.
Available Money has good and marketable title to all ATM Machines listed on
Schedule 6(h).
(i) Real Property. Available Money does not own or hold an
ownership interest in any Real Property.
(j) Leased Real Property. Schedule 6(j) contains a description
of each location for which Available Money has a leasehold interest and an
accurate description (by location, name of lessor, date of lease and term
expiration date) of all Real Property Leases pursuant to which Available Money
has a leasehold interest.
(k) Condition of Facilities.
(i) Use of the Real Property of Available Money for
the various purposes for which it is presently being used is permitted as of
right under all applicable zoning Legal Requirements and is not subject to
"permitted nonconforming" use or structure classifications. All Improvements are
in compliance with all applicable Legal Requirements, including those pertaining
28
to zoning, building and the disabled, are in good repair and in good condition,
ordinary wear and tear excepted, and are free from latent and patent defects. No
part of any Improvement encroaches on any real property not included in the Real
Property of Available Money, and there are no buildings, structures, fixtures or
other Improvements primarily situated on adjoining property which encroach on
any part of the Land.
(ii) Each item of Tangible Personal Property is in
good repair and good operating condition, ordinary wear and tear excepted, is
suitable for immediate use in the Ordinary Course of Business and is free from
latent and patent defects. No item of Tangible Personal Property is in need of
repair or replacement other than as part of routine maintenance in the Ordinary
Course of Business. Except as disclosed in Schedule 6(k)(ii), all Tangible
Personal Property used in the Business is in the possession of Available Money.
(l) Available Money Intellectual Property.
(i) Available Money owns, or is licensed or otherwise
possesses legal enforceable rights to use all: (i) trademarks and service marks
(registered or unregistered), trade dress, trade names and other names and
slogans embodying business goodwill or indications of origin, all applications
or registrations in any jurisdiction pertaining to the foregoing and all
goodwill associated therewith; (ii) patentable inventions, technology, computer
programs and software (including password unprotected interpretive code or
source code, object code, development documentation, programming tools,
drawings, specifications and data) and all applications and patents in any
jurisdiction pertaining to the foregoing, including re-issues, continuations,
divisions, continuations-in-part, renewals or extensions; (iii) trade secrets,
including confidential and other non-public information (iv) copyrights in
writings, designs, software programs, mask works or other works, applications or
registrations in any jurisdiction for the foregoing and all moral rights related
thereto; (v) databases and all database rights; and (vi) Internet web sites,
domain names and applications and registrations pertaining thereto
(collectively, "AVAILABLE MONEY INTELLECTUAL PROPERTY") that are used in the
Business except for any such failures to own, be licensed or process that would
not be reasonably likely to have a Material Adverse Effect.
(ii) Except as may be evidenced by patents issued
after the date hereof, there are no conflicts with or infringements of any
material Available Money Intellectual Property by any third party and the
conduct of the businesses as currently conducted does not conflict with or
infringe any proprietary right of a third party.
(iii) Schedule 6(l)(iii) sets forth a complete list
of all patents, registrations and applications pertaining to the Available Money
Intellectual Property owned by Available Money. Except as set forth on Schedule
6(l)(iii), all such Available Money Intellectual Property listed is owned by
Available Money, free and clear of liens or Encumbrances of any nature.
(iv) Schedule 6(l)(iv) sets forth a complete list of
all material licenses, sublicenses and other agreements in which Available Money
has granted rights to any person to use the Available Money Intellectual
Property. Available Money will not, as a result of the execution and delivery of
this Agreement or the performance of its obligations under this Agreement, be in
29
Breach of any license, sublicense or other agreement relating to the Available
Money Intellectual Property.
(v) To the best of its Knowledge and the Knowledge of
the Sellers, Available Money owns or has the right to use all software currently
used in and material to the Business.
(m) Affiliate Transactions. No officer, director, or employee
of Available Money or any member of the immediate family of any such officer,
director or employee, or any entity in which any of such persons owns any
beneficial interest (other than any publicly-held corporation whose stock is
traded on a national securities exchange or in the over-the-counter market and
less than one percent of the stock of which is beneficially owned by any of such
persons), has any agreement with Available Money or any interest in any of their
property of any nature, used in or pertaining to the business of Available Money
(other than the ownership of capital stock of the corporation as disclosed in
Schedule 6(c)). None of the foregoing Persons has any direct or indirect
interest in any competitor, supplier or customer of Available Money or in any
Person from whom or to whom Available Money leases any property or transacts
business of any nature.
(n) Contracts. Schedule 6(n) is a true, complete and accurate
list of all written or oral Contracts, understandings, agreements and other
arrangements (including a brief description of all such oral arrangements)
executed by an officer or duly authorized employee of Available Money or to
which Available Money is a party either:
(i) involving more than $10,000, or
(ii) in the nature of a collective bargaining
agreement, employment agreement, or severance agreement with any of its
directors, officers and employees.
Available Money has or will deliver prior to Closing to Buyer a correct
and complete copy of each Contract, agreement, and other written arrangement
listed in Schedule 6(n) (the "AVAILABLE MONEY CONTRACTS"). Except as disclosed
in Schedule 6(n): (i) Available Money has fully complied with all material terms
of the Available Money Contracts; (ii) other parties to the Available Money
Contracts have fully complied with the terms of the Available Money Contracts;
(iii) there are no disputes or complaints against Available Money with respect
to nor has Sellers or Available Money received any notices (whether oral or in
writing) that any other party to the Available Money Contracts is terminating,
intends to terminate or is considering terminating, any of the Available Money
Contracts listed or required to be listed in Schedule 6(n); and (iv) there are
no contracts, agreements, understandings, obligations, arrangements or
practices, written or verbal, implied or otherwise, between Available Money
and/or Sellers and any service providers, contractors, agents, banks or other
third parties. Set forth on Schedule 6(n) are all Available Money Contracts
which by their respective terms expire on or before December 31, 2004 (the "2004
CONTRACTS").
(o) Accounts Receivable. All Accounts Receivable that are
reflected in the Available Money Interim Financial Information represent valid
obligations arising from sales actually made or services actually performed by
Available Money in the Ordinary Course of Business. Except to the extent paid
prior to the Closing Date, such Accounts Receivable are or will be as of the
Closing Date current and collectible. Subject to such reserves, each of such
Accounts Receivable either has been
30
or will be collected in full, without any setoff, within ninety (90) days after
the day on which it first becomes due and payable, except as set forth on
Schedule 6(o). There is no contest, claim, defense or right of setoff under any
Contract with any account debtor of an Account Receivable relating to the amount
or validity of such Account Receivable. Schedule 6(o) contains a complete and
accurate list of all Accounts Receivable as of the date hereof, which list sets
forth the aging of each such Account Receivable.
(p) Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of Available Money.
(q) Litigation.
(i) Except as set forth in Schedule 6(q)(i), there is
no pending or, to Available Money's Knowledge, threatened Proceeding:
(A) by or against Available Money or that
otherwise relates to or may affect the Business which, if adversely determined,
would have a Material Adverse Effect; or
(B) that challenges, or that may have the
effect of preventing, delaying, making illegal or otherwise interfering with,
any of the Contemplated Transactions.
To the Knowledge of Available Money, no event has occurred or circumstance
exists that is reasonably likely to give rise to or serve as a basis for the
commencement of any such Proceeding. Available Money has delivered to Buyer
copies of all pleadings, correspondence and other documents relating to each
Proceeding listed in Schedule 6(q)(i). There are no Proceedings listed or
required to be listed in Schedule 6(q)(i) that could reasonably be expected to
have a Material Adverse Effect.
(ii) Except as set forth in Schedule 6(q)(ii):
(A) there is no material Order to which
Available Money or the Business is subject; and
(B) to the Knowledge of Available Money, no
officer, director, agent or employee of Available Money is subject to any Order
that prohibits such officer, director, agent or employee from engaging in or
continuing any conduct, activity or practice relating to the Business.
(iii) Except as set forth in Schedule 6(q)(iii):
(A) Available Money has been and is in
compliance with all of the terms and requirements of each Order to which it or
the Business is or has been subject;
(B) No event has occurred or circumstance
exists that is reasonably likely to constitute or result in (with or without
notice or lapse of time) a violation of or
31
failure to comply with any term or requirement of any Order to which Available
Money or the Business is subject; and
(C) Available Money has not received any
notice or other communication (whether oral or written) from any Governmental
Body or any other Person regarding any actual, alleged, possible or potential
violation of, or failure to comply with, any term or requirement of any Order to
which Available Money or the Business is subject.
(r) Employee Benefits.
(i) Schedule 6(r)(i) lists all material (i) Employee
Benefit Plans of Available Money, (ii) bonus, stock option, stock purchase,
stock appreciation right, incentive, deferred compensation, supplemental
retirement, severance, and fringe benefit plans, programs, policies or
arrangements, and (iii) employment or consulting agreements, for the benefit of,
or relating to, any current or former employee (or any beneficiary thereof) of
Available Money, in the case of a plan described in (i) or (ii) above, that is
currently maintained by Available Money or with respect to which Available Money
has an obligation to contribute, and in the case of an agreement described in
(iii) above, that is currently in effect (the "AVAILABLE MONEY EMPLOYEE PLANS").
Available Money has heretofore made available to Buyer true and complete copies
of the Available Money Employee Plans and any amendments thereto, any related
trust, insurance contract, summary plan description, and, to the extent required
under ERISA or the Code, the most recent annual report on Form 5500 and
summaries of material modifications.
(ii) Except as set forth on Schedule 6(r)(ii), no
Available Money Employee Plan is (1) a "multiemployer plan" within the meaning
of Sections 3(37) or 4001(a)(3) of ERISA, (2) a "multiple employer plan" within
the meaning of Section 3(40) of ERISA or Section 413(c) of the Code, or (3) is
subject to Title IV of ERISA or Section 412 of the Code.
(iii) Except as set forth on Schedule 6(r)(iii),
there is no Proceeding pending or, to Available Money's Knowledge, threatened
against the assets of any Available Money Employee Plan or, with respect to any
Available Money Employee Plan, against Available Money other than Proceedings
that would not reasonably be expected to result in a Material Adverse Effect,
and to Available Money's Knowledge there is no Proceeding pending or threatened
in writing against any fiduciary of any Available Money Employee Plan other than
Proceedings that would not reasonably be expected to result in a Material
Adverse Effect.
(iv) Each of the Available Money Employee Plans has
been operated and administered in all material respects in accordance with its
terms and applicable law, including, but not limited to, ERISA and the Code.
(v) Each of the Available Money Employee Plans that
is intended to be "qualified" within the meaning of Section 401(a) of the Code
has received a favorable determination, notification, or opinion letter from the
IRS.
32
(vi) Except as set forth on Schedule 6(r)(vi), no
director, officer, or employee of Available Money will become entitled to
retirement, severance or similar benefits or to enhanced or accelerated benefits
(including any acceleration of vesting or lapsing of restrictions with respect
to equity-based awards) under any Available Money Employee Plan solely as a
result of consummation of the Contemplated Transactions.
(s) Banking Relationships. Schedule 6(s) sets forth the names
and locations of all banks, trust companies, savings and loan associations and
other financial institutions at which Available Money maintains safe deposit
boxes or accounts of any nature and the names of all persons authorized to have
access thereto, draw thereon or make withdrawals therefrom.
(t) Insurance. Schedule 6(t) is an accurate and complete
description of all policies of insurance of any kind or nature, including, but
not limited to, fire, liability, workmen's compensation and other forms of
insurance owned or held by or covering Available Money or all or any portion of
its property and assets.
(u) Employees.
(i) Schedule 6(u)(i) contains a complete and accurate
list of the following information for each employee, director, independent
contractor, consultant and agent of Available Money, including each employee on
leave of absence or layoff status: employer; name; job title; date of hiring or
engagement; date of commencement of employment or engagement; current
compensation paid or payable and any change in compensation since December 31,
2002; sick and vacation leave that is accrued but unused; and service credited
for purposes of vesting and eligibility to participate under any Available Money
Employee Plan, or any other employee or director benefit plan.
(ii) To the Knowledge of Available Money, no officer,
director, agent, employee, consultant, or contractor of Available Money is bound
by any Contract that purports to limit the ability of such officer, director,
agent, employee, consultant, or contractor (i) to engage in or continue or
perform any conduct, activity, duties or practice relating to the Business or
(ii) to assign to Available Money or to any other Person any rights to any
invention, improvement, or discovery. No former or current employee of Available
Money is a party to, or is otherwise bound by, any Contract that in any way
adversely affected, affects, or will affect the ability of Available Money or
Buyer to conduct the Business as heretofore carried on by Available Money.
(v) Labor Relations. Available Money is not a party to any
collective bargaining or similar agreement. To the Knowledge of Available Money,
there are no strikes, work stoppages, unfair labor practice charges or
grievances pending or threatened against Available Money by any employee of
Available Money or any other Person or entity. Available Money believes that its
relationship with its employees is good.
(w) Legal Compliance.
(i) To the Knowledge of Available Money, except as
set forth on Schedule 6(w), Available Money is in material compliance with all
laws (including rules and regulations
33
thereunder) of any Governmental Bodies having jurisdiction over Available Money,
including any requirements relating to antitrust, consumer protection, currency
exchange, equal opportunity, health, occupational safety, pension and securities
matters.
(ii) Schedule 6(w)(ii) contains a complete and
accurate list of each Governmental Authorization that is held by Available Money
or that otherwise relates to the Business. Each Governmental Authorization
listed or required to be listed in Schedule 6(w)(ii) is valid and in full force
and effect. The Governmental Authorizations listed in Schedule 6(w)(ii)
collectively constitute all of the Governmental Authorizations necessary to
permit Available Money to lawfully conduct and operate the Business.
(x) Brokers' Fees. Available Money has no liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the Contemplated Transactions for which Available Money, Buyer or
Sellers could become liable or obligated.
(y) Undisclosed Liabilities. To the Knowledge of Available
Money, it has no liability (and to the Knowledge of Available Money, there is no
basis for any present or future action, suit, Proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any liability), except for
(i) liabilities reflected or reserved against in the
Available Money Financial Information; or
(ii) liabilities that have arisen in the Ordinary
Course of Business since the date of the Available Money Financial Information.
(z) Disclosure. The representations and warranties of
Available Money contained in this Agreement do not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements and information contained herein not misleading.
7. POST-CLOSING COVENANTS. The Parties agree as follows with respect to
the period following the Closing:
(a) General. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will use commercially reasonable efforts to take such
further action (including the execution and delivery of such further instruments
and documents) as any other Party reasonably may request, all at the sole cost
and expense of the requesting Party.
34
(b) Transition. Sellers and Available Money and each of their
Representatives will take no action that is primarily designed or intended to
have the effect of discouraging any lessor, licensor, customer, supplier or
other business associate of Available Money from maintaining the same business
relationships with Available Money after the Closing as it maintained with
Available Money prior to the Closing.
(c) Nondisparagement. After the Closing Date, no Party shall,
nor shall either of them permit any Related Person to, disparage each other or
their respective shareholders, directors, officers, employees or agents.
(d) Access to Books and Records. For a period of two years
after the Closing Date, Sellers shall have reasonable access to Available
Money's books and records for the purpose of preparing Sellers' income Tax
Returns. Thereafter, Sellers shall have commercially reasonable access to such
books and records (to the extent they are available) for the purpose of
addressing any dispute with or inquiry by any Governmental Body; provided,
however, that such access does not require Buyer to retain any of Available
Money's books and records for a period of greater than four years.
(e) Section 338 Election. In the event that Buyer makes an
election in accordance with Section 338 of the Code, Sellers shall take all
steps deemed necessary and/or appropriate by Buyer to give effect to such
election.
(f) 2004 Contract Renewals.
(i) In the event that 2004 Contracts representing
Operating Income of at least 95% of the Operating Income of all 2004 Contracts
for the twelve (12) months ended December 31, 2003 are not renewed for new terms
of not less than thirty-six (36) months (except for the reasons described
below), then Buyer shall be entitled to a reduction in the Purchase Price
determined by multiplying the Purchase Price by a fraction, the numerator of
which is Available Money's Operating Income for the twelve (12) months ended
December 31, 2003 less the Operating Income for that time period from 2004
Contracts that are not renewed, and the denominator of which is Available
Money's Operating Income for the twelve (12) months ended December 31, 2003 and
reducing the resulting product by $150,000 (a "CONTRACT PURCHASE PRICE
REDUCTION"). Except as otherwise provided herein, any Contract Purchase Price
Reduction shall be charged first against the consideration payable under Section
2(a)(iii) hereof, and then, to the extent necessary but up to a maximum of
$125,000 with respect to each Seller, against the consideration payable under
Section 2(a)(ii) hereof. In the event that 2004 Contracts with aggregate
Operating Income at least equal to 20% of the aggregate Operating Income of all
2004 Contracts for the twelve (12) months ended December 31, 2003 have not been
renewed as of sixty (60) days following the Closing Date, Buyer may withhold
from each Seller $125,000 of the consideration otherwise payable under Section
2(a)(ii) above until such time as such 20% threshold is attained.
(ii) In the event that Sellers and/or Xxxxxx Xxxxx
procure for Available Money any new Contracts for the provision of ATM services
at casinos, without any material participation by Available Money or Buyer, then
the projected annual Operating Income from such Contracts, as reasonably
mutually determined by Buyer and Sellers, may be substituted for one or more
terminating 2004 Contracts in applying the provisions of clause (i) above. In
addition, Schedule 7(f) sets forth those locations at which new ATM machines
have been installed. Any Operating Income from those locations for the twelve
(12) months ended December 31, 2004 in excess of 102% of the Operation Revenue
from those locations
35
for the twelve (12) months ended December 31, 2003 shall be added to the
numerator of the fraction in clause (i) above.
(iii) For purposes of this Subsection (f), "OPERATING
INCOME" shall mean ATM surcharge revenues, plus interchange revenues, less
commissions for rent and/or payments to casinos.
(iv) For purposes of this Subsection (f), a 2004
Contract shall not be considered to have been not renewed if the reason for
nonrenewal is (A) the cessation of business of the applicable casino, (B)
failure of Available Money to submit a competitive bid, as stated in a written
notice to Available Money from Xxxxxx Xxxxx at the time that the bid is
submitted, or (C) assertion by the casino in a notice of nonrenewal or similar
communication of bona fide, specific service failures by Available Money after
December 31, 2003.
(v) In the event that, as a result of the application
of this Subsection (f), Buyer is entitled to a reduction in the Purchase Price
following payment to Sellers of such portion of the Purchase Price, then,
subject to the limitations set forth in Section 7(f)(i), Sellers hereby covenant
and agree to repay such amount within ten (10) Business Days following receipt
of notice from Buyer of such reduction in the Purchase Price. To the extent such
reduction is in the stock portion of the Purchase Price, Buyer shall have the
right to cancel shares of stock shown on its records as owned by a Seller in
order to effect the reduction.
(g) Licensing
(i) Buyer and Sellers will cooperate and use their
respective best efforts in connection with the qualification to do business by
Available Money in each jurisdiction in which it is required to be qualified but
is not so qualified as of the Closing Date, and in connection with the filing by
Available Money of applications with Governmental Bodies for any Governmental
Authorizations which Available Money was required to have as of the Closing Date
but did not have as of the Closing Date. All of such efforts shall be at
Sellers' sole cost and expense, and Sellers shall reimburse Buyer for costs and
expenses incurred by Buyer in such efforts.
(ii) In the event that Available Money is required to
cease its business activities at any location as the result of its failure to
hold any required Governmental Authorization, then (i) if such cessation is
temporary, Sellers shall reimburse Available Money for all lost Operating Income
from the Contracts under which Available Money was forced to suspend operations,
and (ii) if such cessation is permanent, either by order of a Governmental Body
or due to termination of the Contract by the other party thereto, then such
Contract shall be deemed a nonrenewed 2004 Contract for purposes of Section 7(f)
above regardless of whether such Contract initially was scheduled to termination
in 2004.
(iii) In the event that all required Governmental
Authorizations have not been received as of the date that is 60 days following
the Closing Date, Buyer shall have the right to withhold from the payments of
the Purchase Price otherwise payable under Section 2(a)(ii) and 2(a)(iii)
hereunder an amount equal to the Purchase Price multiplied by a fraction, the
numerator of which is the Operating Income for 2003 under the Contracts in those
jurisdictions in which the
36
Governmental Authorizations have not been received, and the denominator of which
is Available Money's aggregate Operating Income for 2003; provided, that such
amount may be withheld from cash payments under Section 2(a)(ii) only to the
extent that the aggregate potential reduction in Purchase Price under Section
7(f) and this Section, based upon renewals as of the date in question, exceed
$2,000,000.
(h) Keyman Life Insurance. Available Money shall retain
ownership of the universal life insurance policy #___________ held by Available
Money on the life of Xxxxxx Xxxxx until the earlier of (i) the one (1) year
anniversary of the Closing Date or (ii) the date on which all 2004 Contracts
have been renewed pursuant to the provisions of Section 7(f). During this
period, Buyer agrees not to withdraw any cash from this insurance policy and the
Parties agree that if Xxxxxx Xxxxx dies during this period then Buyer shall be
entitled to retain the death benefit for this policy and shall distribute one
half of the cash value of the policy on the Closing Date to each Seller. Upon
the expiration of this period, absent further instructions, Buyer shall assign a
one half interest in this insurance policy to each Seller.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) Survival. All of the representations and warranties of the
Parties contained in this Agreement shall survive and continue in full force and
effect for a period of eighteen (18) months from the Closing Date, except with
regards to Tax matters which shall survive for a period of time which is equal
to the statute of limitations with respect to the Tax liability being asserted
plus ninety (90) days.
(b) Indemnification Provisions for Benefit of Buyer. Subject
to the terms of this Section 8, Sellers shall indemnify, defend, reimburse and
hold harmless Buyer from and against any and all claims, demands, penalties,
fines, liabilities, obligations, losses, settlements, damages, costs and
expenses resulting from:
(i) any material inaccuracy in, or Breach of, any
representation and warranty or nonfulfillment of any covenant on the part of
Sellers contained in this Agreement;
(ii) any material misrepresentation in or omission
from or nonfulfillment of any covenant on the part of Sellers contained in any
other agreement, certificate or other instrument furnished or to be furnished to
Buyer pursuant to this Agreement;
(iii) all federal, state, county, local, foreign and
other Taxes of Sellers or Available Money for periods on or prior to December
31, 2003, including, income Taxes, excise Taxes, sales Taxes, use Taxes, gross
receipts Taxes, franchise Taxes, employment and payroll related Taxes, property
Taxes and import duties, and any penalties or interest, whether or not measured
in whole or in part by net income, relating to the taxable periods or portions
thereof ending upon the close of business on the Closing Date or related to the
Contemplated Transactions, which are not timely paid by Sellers and which Buyer
or Available Money pays;
(iv) any and all debts, liabilities or obligations of
Available Money, or claims against Available Money, relating to or arising out
of the operation of the Business of Available
37
Money and any successor or assign thereof on or prior to December 31, 2003, less
the amount of any proceeds received by Available Money from a claim filed under
its insurance policies with respect to any insurance coverage for such debts,
liabilities or obligations, provided that, Buyer agrees to have Available Money
file a claim under its insurance policies with respect to such debts,
liabilities or obligations, and to use commercially reasonably efforts to
cooperate with the insurance company in processing such claims. Sellers agree
that they shall each be responsible for reimbursing Available Money for any
increased premiums experienced as a result of such claims during the three (3)
year period commencing on the date that such claims are paid; and
(v) reasonable fees and disbursements of counsel
incident to any of the foregoing.
The indemnification of Buyer provided by this Section 8(b) shall be in
addition to the tax indemnification set forth in Section 3(e). Notwithstanding
anything herein, if each Seller delivers to Buyer on the Closing Date a personal
financial statement certified by such Seller to be complete and accurate, in a
form reasonably satisfactory to Buyer, then in no event shall the obligations of
either Seller pursuant to this Section 8(b) exceed the Seller's Pro Rata Portion
of the Purchase Price paid to such Seller plus the reasonable costs incurred by
Buyer to enforce its rights pursuant to this Section 8(b).
(c) Indemnification Provisions for Benefit of Sellers. Subject
to the terms of this Section 8, Buyer shall indemnify, defend, reimburse and
hold harmless Sellers from and against any and all claims, demands, penalties,
fines, liabilities, obligations, losses, settlements, damages, costs and
expenses resulting from:
(i) any material inaccuracy in, or Breach of, any
representation and warranty or nonfulfillment of any covenant on the part of
Buyer contained in this Agreement;
(ii) all federal, state, county, local, foreign and
other Taxes of Available Money, including, income Taxes, excise Taxes, sales
Taxes, use Taxes, gross receipts Taxes, franchise Taxes, employment and payroll
related Taxes, property Taxes and import duties, and any penalties or interest,
whether or not measured in whole or in part by net income, relating to the
taxable periods or portions thereof commencing after the close of business on
the Closing Date which are not timely paid by Available Money or Buyer and which
Sellers pay;
(iii) any and all debts, liabilities or obligations
of Available Money, or claims against Available Money, relating to or arising
out of the operation of the Business of Available Money and any successor or
assign thereof after the Closing Date; and
(iv) reasonable fees and disbursements of counsel
incident to any of the foregoing.
The indemnification of Sellers provided by this Section 8(c) shall be
in addition to the tax indemnification set forth in Section 3(e).
38
(d) Indemnification Procedure for Third Party Claims. The
Party seeking indemnification under this Section 8 shall give the Party from
whom indemnification is sought prompt written notice of the assertion of any
Third Party claim of which said Party has Knowledge which is covered by the
indemnity agreements set forth in this Section 8. If the Party obligated to
indemnify wishes to defend such claim for which such Party is or may be liable,
then such Party may, at its own expense, defend such claim; provided, however,
that the indemnitee or indemnitees may retain counsel (at the indemnitee's
expense) to monitor the defense of such claim. If the Party obligated to
indemnify, within a reasonable period of time after notice of any such claim,
fails to defend, the Party seeking indemnification will have the right to
undertake the defense, compromise or settlement of such claim, subject to the
right of the indemnifying Party to assume the defense of such claim at any time
prior to settlement, compromise or final determination thereof.
(e) Payment of Sums Due. After any final non-appealable
judgment or award shall have been rendered by a court, arbitration board or
administrative agency of competent jurisdiction, or a settlement shall have been
completed, or the Parties shall have arrived at a mutually binding agreement,
with respect to each separate Third Party claim indemnified by the Party
obligated to indemnify, the Party seeking indemnification shall forward to the
Party obligated to indemnify notice of any sums due and owing (and the times
when due) by the Party seeking indemnification with respect to such claim and
the Party obligated to indemnify shall pay such sums to the Party seeking
indemnification in cash, within 30 days after the date of such notice or, if any
such sums are due more than 90 days after the date of such notice, ten days
prior to the date each such sum is due.
(f) Good Faith Efforts to Settle Disputes. Each of the Parties
agrees that, prior to commencing any litigation against the other concerning any
matter with respect to which such Party intends to claim a right of
indemnification in such Proceeding, such Parties shall meet in a timely manner
and attempt in good faith to negotiate a settlement of such dispute.
(g) Fees and Expenses. Notwithstanding any other provision in
this Section 8, in the event of any dispute or controversy, the prevailing Party
in such dispute shall, in addition to any other remedies the prevailing Party
may obtain in such dispute, be entitled to recover from the other Party all of
its reasonable legal fees and out-of-pocket costs incurred by such Party in
enforcing or defending its rights hereunder, excluding any costs incurred under
Section 8(f).
(h) Notice of Claims. No claim by any Party for
indemnification under this Section 8 shall be valid unless the Party seeking
indemnification provides written notice of such claim to the other Party on or
before the third anniversary of the Closing Date except that:
(i) in the case of representations and warranties or
covenants regarding tax matters, such notice must be given on or before the
expiration of the statue of limitations applicable to the liability underlying
the claim; and
(ii) in the case of any covenant contained herein
that by its terms explicitly extends beyond such third anniversary, such notice
must be given on or before the expiration of the time period explicitly
referenced in such covenant. The liability of any Party for indemnification with
respect to any claim for indemnification for which the indemnified Party has
timely given
39
notice pursuant to this Section 8(h) shall continue until such liability for
indemnification shall have been finally determined pursuant to this Section 8.
(i) Litigation Support. If, and for so long as, any Party
actively is contesting or defending against any action, suit, Proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any Contemplated Transaction, or
(ii) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction on or prior to the Closing Date involving the
Business, the other Party will cooperate with the contesting or defending Party
and its counsel in the contest or defense, make available its personnel and
provide such testimony and access to its books and records as shall be necessary
in connection with the contest or defense, all at the sole cost and expense of
the contesting or defending Party, unless the contesting or defending Party is
entitled to indemnification therefor under this Section 8.
(j) Sole Remedy. The Parties hereby agree that the rights and
remedies set forth in this Section 8 shall constitute each Party's sole remedy
against each of the other Parties after the Closing for the Breach of any
representation, warranty or covenant herein made by such other Party.
9. POST CLOSING REVIEW PERIOD.
(a) The Parties acknowledge and agree that, due to Sellers'
requested timetable for Closing, the Parties have been unable to complete their
customary due diligence investigations prior to Closing. Therefore, for a period
of sixty (60) days after the Closing Date (the "REVIEW PERIOD"), (i) Buyer shall
have the right to review the business, operations, assets, books and records of
Available Money, and request additional documentation or information from
Sellers as needed to complete a thorough due diligence investigation of
Available Money, and Sellers shall have the right to review the business,
operations, assets, books and records of Buyer, and request additional
documentation or information from Buyer, as needed to complete a thorough due
diligence investigation of Buyer.
(b) In the event that Buyer determines as a result of its
investigation that any of the representations and warranties of Sellers and/or
Available Money set forth in Sections 4 or 6 above were materially inaccurate as
of the Closing Date, or that other facts or circumstances existed as of the
Closing Date that materially reduce the value of the Available Money Shares from
that determined based on information provided to Buyer prior to the Closing
Date, Buyer shall notify Sellers in writing of that determination prior to the
end of the Review Period, which notice shall state the basis for such
determination and shall include a proposed reduction in the Purchase Price to
reflect the matters leading to such determination. Following receipt of such
notice by Sellers, the Parties shall attempt to resolve the issue by
negotiation, and each shall negotiate in good faith. In the event that such
negotiations are not successful after a period of thirty (30) days following
Sellers' receipt of Buyer's notice, any Party may require that the dispute be
submitted to determination by an independent accounting, investment banking or
valuation firm acceptable to both parties (the "APPRAISER"), to which each Party
shall provide such information as the Appraiser shall request, and
40
the determination of the Appraiser of any reduction (or no reduction) in the
Purchase Price shall be binding on all parties absent manifest error. No
otherwise scheduled payments of the Purchase Price under Section 2(a) above
shall be due and payable until completion of the foregoing process. In the event
of any reduction in the Purchase Price, Buyer may only effect such reduction to
the stock portion of the Purchase Price.
(c) In the event that Sellers determine based on such review
that any of the representations and warranties of Buyer set forth in Section 5
above were materially inaccurate as of the Closing Date, or that other facts or
circumstances existed as of the Closing Date that, if publicly disclosed prior
to the Closing Date, would have resulted in a material reduction in the Stock
Valuation, Sellers shall notify Buyer in writing of that determination prior to
the end of the Review Period, which notice shall state the basis for such
determination and shall include a proposed reduction in Stock Valuation to
reflect the matters leading to such determination. Following receipt of such
notice by Buyer, the Parties shall attempt to resolve the issue by negotiation,
and each shall negotiate in good faith. In the event that such negotiations are
not successful after a period of thirty (30) days following Buyer's receipt of
Sellers' notice, any Party may require that the dispute be submitted to
determination by an Appraiser nationally-recognized independent accounting firm
acceptable to both parties, to which each Party shall provide such information
as such accounting firm shall request, and the determination of such accounting
firm of any reduction (or no reduction) in the Stock Valuation shall be binding
on all parties absent manifest error. In the event of the agreement of the
Parties or determination of the Appraiser of a reduction in the Stock Valuation,
Buyer shall within ten Business Days thereafter issue to each Seller his or her
Seller's Pro Rata Portion of such additional shares of Buyer's common stock as
are required to reflect such reduction.
10. MISCELLANEOUS.
(a) Press Releases and Announcements. No Party shall issue any
press release or public announcement relating to the subject matter of this
Agreement until after the Closing without the prior written approval of the
other Party; provided, however, that any Party may make any public disclosure in
a filing with the Securities and Exchange Commission or any state securities
commission that it believes in good faith is required by law or regulation (in
which case the disclosing Party will advise the other Party prior to making the
disclosure). The terms of this Section 10(a) shall not prevent any Party from
communicating with its employees and lenders regarding the content of this
Agreement.
(b) No Third Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any person other than the Parties and their
respective successors and permitted assigns.
(c) Entire Agreement and Modification. This Agreement
(including the documents referred to herein) constitutes the entire agreement
between the Parties and supersedes any prior understandings, agreements or
representations by or between the Parties, written or oral, that may have
related in any way to the subject matter hereof. No amendment or modification of
any provision of this Agreement shall be valid unless the same shall be in
writing and signed by the Party to be charged with the amendment.
41
(d) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests or obligations hereunder without the prior written
approval of Buyer, Sellers and Available Money. Notwithstanding the foregoing,
Sellers may assign its rights hereunder to a wholly-owned Subsidiary of Sellers,
provided that Sellers shall remain liable for its obligations set forth in this
Agreement as if such assignment had not occurred hereunder.
(e) Disclosure Schedules.
(i) The information in the Disclosure Schedules
constitutes (i) exceptions to particular representations, warranties, covenants
and obligations of Available Money, Sellers and Buyer as set forth in this
Agreement or (ii) descriptions or lists of items referred to in this Agreement.
If there is any inconsistency between the statements in this Agreement and those
in the Disclosure Schedules (other than an exception expressly set forth as such
in the Disclosure Schedules with respect to a specifically identified
representation or warranty), the statement in this Agreement will control.
(ii) The statements in the Disclosure Schedules, and
those in any supplement thereto, relate only to the provisions in the Section of
this Agreement to which they expressly relate and not to any other provision in
this Agreement.
(f) Counterparts. This Agreement may be executed and delivered
in one or more counterparts, each of which shall be deemed an original, but all
of which together will constitute one and the same instrument. The exchange of
copies of this Agreement and of signature pages by facsimile transmission shall
constitute effective execution and delivery of this Agreement as to the Parties
any may be used in lieu of the original Agreement for all purposes. Signatures
of the Parties transmitted by facsimile shall be deemed to be their original
signatures for all purposes.
(g) Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not in any way affect the meaning or
interpretation of this Agreement.
(h) Notices. Any and all notices required or permitted
hereunder shall be deemed to be sent or delivered when personally delivered to
the recipient or when mailed by certified or registered mail with proper first
class postage affixed thereto to the Parties hereto, as follows:
(i) If to Sellers:
Xxxxxx Xxxxx
0000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000-0000
Facsimile: 000-000-0000
42
and
Xxxxxx X. Freshman
0000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000-0000
Facsimile: 000-000-0000
With a copy to:
Xxxx Xxxxxxxx
0000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000-0000
If to Buyer:
000 X. Xxxxxxxxx Xxxx Xxxxx 000
Xxxx xx Xxxxxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxxxxxx
Facsimile: 000-000-0000
With a copy to:
Klehr, Harrison, Xxxxxx, Branzburg & Xxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
Any notice required to be made within a stated period of time shall be
considered timely mailed if deposited before midnight of the last day of the
stated period. Any Party may give any notice or other communication hereunder
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail or electronic mail), but no such notice,
request, demand, claim or other communication shall be deemed to have been duly
given unless and until it is actually received by the individual, or by a person
at the address of the individual, for whom it is intended. Any Party may change
the address to which notices, requests, demands, claims or other communications
hereunder are to be delivered by giving the other Party notice in the manner set
forth herein.
(j) Governing Law. This Agreement shall in all respects be
governed by and construed in accordance with the internal laws (and not the law
of conflict of laws) of the State of Delaware.
(k) Submission to Jurisdiction. Each Party submits to the
jurisdiction of any state or federal court sitting in the State of Delaware, New
Castle County in any action or Proceeding arising out of or related to this
Agreement; agrees that all claims in respect of the action or Proceeding may be
heard and determined in any such court; and agrees not to bring any action or
Proceeding arising
43
out of or relating to this Agreement in any other court. Each Party waives any
defense of inconvenient forum to the maintenance of any action or Proceeding so
brought and waives any bond, surety or other security that might be required of
any other Party with respect thereto. Each Party agrees that a final judgment in
any action or Proceeding so brought shall be conclusive and may be enforced by
suit on the judgment or in any other manner provided by law. The Parties agree
that any or all of them may file a copy of this paragraph with any court as
written evidence of the knowing voluntary and bargained agreement between the
Parties irrevocably to waive any objections to venue or to convenience of forum.
Process in any Proceeding referred to in the first sentence of this section may
be served on any party anywhere in the world.
(l) Enforcement of Agreement. The Parties acknowledge and
agree that they would be irreparably damaged if any of the provisions of this
Agreement are not performed in accordance with their specific terms and that any
Breach of this Agreement by any Party could not be adequately compensated in all
cases by monetary damages alone. Accordingly, in addition to any other right or
remedy to which the Party may be entitled, at law or in equity, it shall be
entitled to enforce any provision of this Agreement by a decree of specific
performance and to temporary, preliminary and permanent injunctive relief to
prevent Breaches or threatened Breaches of any of the provisions of this
Agreement, without posting any bond or other undertaking.
(m) Wavier; Remedies Cumulative. The rights and remedies of
the Parties to this Agreement are cumulative and not alternative. Neither any
failure nor any delay by any Party in exercising any right, power or privilege
under this Agreement or any of the documents referred to in this Agreement will
operate as a waiver of such right, power or privilege, and no single or partial
exercise of any such right, power or privilege will preclude any other or
further exercise of such right, power or privilege or the exercise of any other
right, power or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement or any of the documents
referred to in this Agreement can be discharged by one Party, in whole or in
part, by a waiver or renunciation of the claim or rights unless in writing
signed by the other Party; (b) no waiver that may be given by a Party will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on one Party will be deemed to be a waiver of any obligation
of that Party or of the right of the Party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
(n) Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration or area of the term or provision, to delete specific words
or phrases or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of time
within which the judgment may be appealed.
44
(o) Expenses. Except as otherwise provided in this Agreement,
each of the Parties will bear its respective costs and expenses (including legal
fees and expenses) incurred in connection with the preparation, negotiation,
execution and performance of this Agreement and the Contemplated Transactions.
(p) Construction. Time is of the essence of this Agreement.
The language used herein will be deemed to be the language chosen by the Parties
to express their mutual intent, and no rule of strict construction shall be
applied against any Party. Any reference to any federal, state, local or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise.
(q) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(r) Litigation. In the event of litigation arising of or
connected with the Contemplated Transactions, the prevailing Party in any such
action shall be entitled to recover of the other Party all costs of court,
including attorneys' fees and court costs at the trial level.
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
45
IN WITNESS WHEREOF, the Parties have hereunto set their hands and seals
as of the date first above written.
SHAREHOLDERS:
/s/ Xxxxxx Xxxxx
----------------------------------------
Xxxxxx Xxxxx
/s/ Xxxxxx Freshman
----------------------------------------
Xxxxxx Freshman
BUYER:
iGAMES ENTERTAINMENT, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxxxxxx
-----------------------------
Xxxxxxxxxxx X. Xxxxxxxxxx, CEO
AVAILABLE MONEY:
AVAILABLE MONEY, INC.
By: /s/ Xxxxxx Xxxxx
----------------
Xxxxxx Xxxxx,
46
EXHIBITS
EXHIBIT A Disclosure Schedules
EXHIBIT B Covenant Not to Compete
47
