EXHIBIT 99(a)
MASTER AGREEMENT
THIS MASTER AGREEMENT ("Agreement") is made and entered into as of this
15th day of March, 2001, by and between Chequemate International Inc., a Utah
corporation (together with all Subsidiaries of Chequemate International Inc.,
"the Company") and Another World Inc., a corporation established under the laws
of the Republic of Korea ("AWK"), pursuant to which the shareholders of AWK
("Purchasers") will purchase shares of common stock of the Company (AWK,
together with the Company are collectively referred to as the "Parties").
WITNESSETH
WHEREAS, the Company believes it is highly desirable and in the best
interests of the Company to receive an injection of cash and viable assets from
the Purchasers; WHEREAS, the Purchasers and the Company desire that Purchasers
acquire its equity interest in the Company in two phases;
WHEREAS, the Purchasers and the Company desire that in the first phase, to
be completed on or about March 23, 2001, or as soon as practicable thereafter
based on the date Purchasers completes its due diligence and the AWK and the
Company obtain all requisite corporate and Governmental Authority approvals,
Purchasers will acquire pursuant to a subscription agreement ("Subscription
Agreement") the First Shares and Warrants;
WHEREAS, the Purchasers and the Company desire that the second phase will
be completed after the First Closing as soon as an audit of the AWK's assets is
completed according to GAAP;
WHEREAS, in the second phase, Purchasers shall inject certain assets into
the Company through a merger or similar transaction for additional shares in and
to the Company (the "Second Closing," together with the First Closing, the
"Acquisition") in consideration for an increased equity interest in the Company
("Second Shares");
WHEREAS, after giving effect to the Acquisition, the Parties intend that
AWK and the Company will be fully integrated, by merger (with the resulting
Company being redomiciled in the British Virgin Islands) or otherwise; WHEREAS,
the Company desires to cooperate fully with Purchaser and AWK in all aspects of
the Acquisition, including, but not limited to, negotiations, due diligence and
the obtaining of necessary approvals, and AWK and the Purchasers desire to
cooperate fully with the Company in all aspects of the Acquisition, including,
but not limited to, negotiations, due diligence and the obtaining of necessary
approvals;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements herein contained, the Parties hereby agree as follows:
DEFINITIONS
The following terms shall have the meanings set forth herein for the
purposes of this Agreement:
"Affiliate" of any person shall mean any corporation, limited liability
company, proprietorship, partnership or other business entity which, directly or
indirectly, owns or
controls, is under common ownership or control with, or is owned or controlled
by, such person. Control shall mean control by virtue of share ownership,
contractual agreement or any other set of facts that establishes the ability to
influence the management of the relevant entity.
"Agreement" shall mean this Master Agreement, including all Exhibits and
Schedules hereto, as it may be amended from time to time in accordance with its
terms.
"Business" shall mean centric graphical software applications, hotel
pay-per-view services, and cable channel services. For greater certainty and
without in any way diminishing the foregoing, the Business includes the
VisionComm Business.
"Business Combination" means with respect to any person any (i) merger,
consolidation or combination to which such person is a party, (ii) any sale,
dividend, split or other disposition of any capital stock or other equity
interests of such person, (iii) any tender offer (including without limitation a
self-tender), exchange offer, recapitalization, liquidation, dissolution or
similar transaction, (iv) any sale, dividend or other disposition of all or a
material portion of the assets and properties of such person or (v) the entering
into of any agreement or understanding, or the granting of any rights or
options, with respect to any of the foregoing.
"Claim Notice" shall have the meaning given to it in SECTION 13.6.
"Employee Benefit Plan" shall have the meaning given to it in SECTION
3.10.
"Environmental Law" means any and all laws, statutes, ordinances, orders,
common law, codes, rules, regulations, permits, authorizations, licenses,
policies, guidance documents, judgments, decrees, injunctions, or agreements
with any governmental or regulatory authority, relating to the protection of
health or the environment, worker or public health and safety, and/or governing
the handling, use, generation, treatment, storage, transportation, disposal,
manufacture, distribution, formulation, packaging, labeling, release, spilling,
leaking, emitting, discharging, leaching, dumping, disposal of or exposure to
any Hazardous Substance, whether now existing or subsequently amended or
enacted.
"Financial Statements" shall mean (i) the audited financial statements for
the Company as of March 31, 2000, and for the twelve (12) months then ended, as
audited by the Company' independent certified public accountants; (ii) the
unaudited financial statements for the Company as of December 31, 2000, and for
the nine (9) months then ended; (iii) the audited financial statements for each
Subsidiary individually and for the Company and all of the Subsidiaries on a
consolidated basis as of March 31, 2000, and for the twelve (12) months then
ended as audited by the Company' independent certified public accountants; and
(iv) the unaudited financial statements for each Subsidiary individually and for
the Company and all Subsidiaries on a consolidated basis for the nine-month
period ending December 31, 2000 copies of which are attached hereto as SCHEDULE
3.3 All financial statements shall be prepared in accordance with GAAP.
"First Closing" shall have the meaning given to it in the Preamble and
SECTION 1.1.
"First Closing Date" shall have the meaning given to it in SECTION 10.1
"First Price" shall have the meaning given to it in SECTION 1.1.
"First Purchase Price" shall have the meaning given to it in SECTION 2.1.
"First Shares" shall have the meaning given to it in SECTION 1.1.
"First Shares and Warrants" shall have the meaning given in SECTION 1.1.
"Fully Diluted Basis" shall mean, with respect to the share capital of the
Company, all outstanding shares of capital stock of the Company (the
"Outstanding Shares") and all options (whether vested or unvested), warrants,
rights, calls, commitments or agreements of any character to which the Company
is a party or by which it is bound that contemplates the issuance of shares of
capital stock of the Company or any securities convertible into or exercisable
or exchangeable for, or representing the right to purchase or otherwise receive,
directly or indirectly, any such capital stock, or other arrangement to acquire,
at any time or under any circumstance, capital stock of the Company or any such
other securities. For greater certainty, when "Fully Diluted Basis" is used in
connection with the Acquisition, the definition shall include the shares of
Common Stock issued to the Purchasers and the shares of Common Stock issuable to
the Purchasers upon the exercise of warrants issued to the Purchasers pursuant
to the First Closing or Second Closing, as applicable.
"GAAP" shall mean generally accepted accounting principles in the United
States at the time in effect, consistently applied from period to period.
"Governmental Authority" shall mean, respectively, the government of the
United States, or any state, county, city or political subdivision or agency
thereof and any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government, any arbitrator,
tribunal or panel of arbitrators and shall include, without limitation, any
stock exchange, or quotation service.
"Hazardous Substance" shall mean petroleum, petroleum hydrocarbons or
petroleum products, petroleum by-products, radioactive materials, asbestos or
asbestos-containing materials, gasoline, diesel fuel, pesticides, radon, urea
formaldehyde, lead or lead-containing materials, polychlorinated biphenyls, and
any other chemicals, materials, substances, pollutants, contaminants, or wastes
in any amount or concentration which are now or hereafter become regulated or
prohibited under any Environmental Laws.
"Indebtedness" means, as to any person or legal entity; (i) all
obligations, whether or not contingent, of such person for borrowed money
(including, without limitation, reimbursement and all other obligations with
respect to surety bonds, letters of credit and bankers' acceptances, whether or
not matured), (ii) all obligations of such person evidenced by notes, bonds,
debentures or similar instruments, (iii) all obligations of such person
representing the balance of deferred purchase price of property or services,
except trade accounts payable and accrued commercial or trade liabilities
arising in the ordinary course of business, (iv) all interest rate and currency
swaps, caps, collars and similar
agreements or hedging devices under which payments are obligated to be made by
such person, whether periodically or upon the happening of a contingency, (v)
all Indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such person, (vi) all
obligations of such person under leases which have been or should be, in
accordance with GAAP, recorded as capital leases, (vii) all Indebtedness secured
by any Lien (other than Liens in favor of lessors under leases of equipment or
real property) on any property or asset owned or held by that person regardless
of whether the Indebtedness secured thereby shall have been assumed by that
person or is nonrecourse to the credit of that person, (viii) all Indebtedness
of any other person referred to in clauses (i) through (vii) above, guaranteed,
directly or indirectly, by that person.
"Intellectual Property" shall mean all patents, patent applications,
patent licenses, trade names, trademarks, trade name and trademark registrations
(and applications therefor), copyrights and copyright registrations (and
applications therefor), service marks, service names and service xxxx and
service name registrations (and applications therefor), brand names, inventions,
processes, formulae, trade dress, business and product names, logos, slogans,
trade secrets, industrial models, processes, designs, methodologies, computer
programs (including all source codes where applicable) and related
documentation, technical information, manufacturing, engineering and technical
drawings and know-how owned or licensed by a the Company, or a Subsidiary and
used in the operation of the Business.
"Liabilities" means all Indebtedness, obligations and other liabilities of
a person (whether absolute, accrued, contingent, known or unknown, fixed or
otherwise, or whether due or to become due).
"Liens" shall mean any mortgage, pledge, assessment, security interest,
lease, Lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale agreement, title retention agreement or agreement
committing to grant any of the foregoing.
"Losses" shall mean all liabilities, losses, costs, damages, penalties or
expenses (including, without limitation, interest, reasonable attorneys' fees
and expenses and costs of investigation and action, suit or proceeding, expenses
of accountants and other experts or other expenses of litigation or other
proceedings or fees and expenses related to any claim, default or assessment).
"Material Adverse Effect" shall mean, with respect to any entity: (a) any
effect on or change in the condition (financial or otherwise), business, assets
or results of operations of the entity which, alone or taken together with any
other such effects or changes at such entity, would have or could reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), business, assets or results of operations, taken as a whole, of such
entity; or (b) any effect on or change in the condition (financial or
otherwise), business, assets or results of operations of any or all Subsidiaries
of the entity taken as a whole which, alone or taken together with any other
such effects or changes, would have or could reasonably be expected to have a
material
adverse effect on the condition (financial or otherwise), business, assets or
results of operations of the entity and such Subsidiaries taken as a whole.
"Permits" shall have the meaning given to it in SECTION 3.6.
"Real Property Leases" shall have the meaning given to it in SECTION 3.7.
"Reverse Stock Split" shall have the meaning given to it in SECTION
7.1(J).
"Second Closing" shall have the meaning given to it in the Preamble and
SECTION 1.2.
"Second Closing Date" shall have the meaning given to it in SECTION 11.1.
"Second Price" shall have the meaning given to it in SECTION 1.2.
"Second Purchase Price" shall have the meaning given to it in SECTION 2.1.
"Second Shares" shall have the meaning given to it in SECTION 11.1.
"Subscription Agreement" shall have the meaning given to it in SECTION
1.2.
"Subsidiary" shall mean any company (including partnerships, limited
liability companies, unlimited liability companies or other entities) of the
Company in which the Company owns over 50% of the voting equity, all of which
are listed on Schedule 3.1.
"Taxes" shall mean all taxes, charges, fees, duties, levies or other
assessments, including without limitation, income, gross receipts, net proceeds,
ad valorem, turnover, real and personal property (tangible and intangible),
sales, use, franchise, excise, value added, stamp, leasing, lease, user,
transfer, fuel, excess. profits, occupational and interest equalization,
windfall profits, severance, withholding. Social Security taxes and duties,
which are imposed by the United States or any foreign government, or any state
or local government or subdivision or agency thereof and such term shall include
any interest, penalties or additions to tax attributable to such Taxes.
"Transaction Agreements" shall mean the Subscription Agreement, the Waiver
and Release and the
"VisionComm" means VisionComm Inc., a Delaware corporation.
"VisionComm Business" means the business previously conducted by
VisionComm.
"Warrants" shall have the meaning given to it in Section 1.1.
ARTICLE I
TWO CLOSINGS
1.1 FIRST CLOSING. Subject to the terms and conditions of this Agreement, at
the First Closing, the Company shall issue to Purchasers listed on Schedule 1.1
and Purchasers or its designee(s) shall purchase (a) an amount of shares of the
Company's common stock , par value $.0001 per share (the "Common Stock"), equal
to fifty-one percent (51%) of the issued and outstanding Common Stock,
calculated on a FULLY DILUTED BASIS in the form of newly-issued shares of the
Common Stock (the "First Shares"), the dollar number derived from the quotient
of the First Purchase Price and the First Shares shall be the "First Price",
plus (b) warrants (the "Warrants" and together with the First Shares, the "First
Shares and Warrants") to purchase additional shares of Common Stock at the First
Price (the "First Closing") that when exercised will give the Purchasers
approximately at least a 75% equity stake in the Company. The First Shares and
Warrants shall be fully paid and nonassessable, and the Common Stock issuable
upon exercise of the Warrants in accordance with their terms shall be fully paid
and nonassessable when issued. The issuance of the First Shares and Warrants by
the Company to the Purchasers shall take place pursuant to the separate
execution of the Subscription Agreement and Warrant in substantial the form
attached hereto as EXHIBIT A and EXHIBIT B, respectively.
1.2 SECOND CLOSING. Subject to the terms and conditions of this Agreement, at
the Second Closing, the Company shall issue to the Purchasers listed on
Schedule 1.2 and the Purchasers or shall purchase additional shares of Common
Stock (the "Second Shares"), in an amount calculated as set forth in Section
2.2 hereof. The Second Shares shall be fully paid and nonassessable. The
issuance of the Second Shares by the Company to the Purchasers shall take
place pursuant to the separate execution of the Subscription Agreement
substantially in the form attached hereto as EXHIBIT A. The valuation of the
assets transferred to the Company at the Second Closing shall be determined
by Samil Accounting Corporation, a member firm of PriceWaterhouse Coopers or
an equivalent.
1.3 REGISTRATION RIGHTS. Upon the issuance of each of the First Shares and the
Second Shares at the First Closing and the Second Closing in accordance
herewith, and upon the issuance of shares of Common Stock upon the exercise
of the Warrants in accordance with their terms, the holders of all of such
shares of Common Stock will have the registration rights set forth
respectively in Schedule 1.3 attached hereto and made a part hereof.
ARTICLE II
PURCHASE PRICE AND PAYMENT
2.1 PAYMENT OF FIRST PURCHASE PRICE AND THE SECOND PURCHASE PRICE
(a) In consideration of the First Shares and Warrants, Purchasers shall
pay to the Company at the First Closing the sum of Three and
One-Half Million Dollars ($3.5 million) (the "First Purchase Price")
in immediately available funds, by means of wire transfer to the
Company's bank account designated in a writing delivered to
Purchasers at least two business days prior to the First Closing
Date.
(b) In consideration of the Second Shares, Purchasers shall contribute
to the Company at the Second Closing by means of merger or
otherwise, the operations of Another World including the in kind
assets listed on Schedule 2.1(b) (the value thereof being the
"Second Purchase Price"). The number of shares of Common Stock
comprising the Second Shares shall be the quotient of (1) the Second
Purchase Price divided by (2) the lower of (a) the First Price or
(b) 75% of the average of the last reported trading price on each of
the last five business days immediately preceding the Second Closing
Date "Second Price" (or, if no trades of Common Stock were executed
on the American Stock Exchange on any of such days, then the average
of the "bid" and "ask" price on such day).
2.2. FIRST PURCHASE PRICE ADJUSTMENT.
(a) The First Purchase Price shall be adjusted in accordance with
this SECTION 2.2 to reflect any negative change in the known
outstanding or pending Liabilities or Losses between the date of
this Agreement and the date of the First Closing ("First Negative
Change"), including, but not limited to any negative change in
the Liabilities or Losses arising from the that certain Paladin
Credit Agreement between the Company and Paladin Trading Limited
dated August 31, 2000 and that certain Common Stock Purchase
Agreement between the Company and Crooks Hollow Road, LLC, dated
MAY 10, 2000. With respect to any First Negative Change, the
Company shall either: (1) reimburse the Purchasers for such First
Negative Change, or (2) the Purchasers may demand the Company to
issue additional Common Shares to the Purchasers at the First
Price in the amount of such First Negative Change.
(b) The First Negative Change, if any, plus interest thereon at an
annual rate equal to eight percent (8%) from and including the
First Closing Date to, but not including, the date of payment
shall be paid to the Purchasers at the sole discretion of the
Purchasers either: (i) as an indemnification payment to the
Purchasers from the Company, or (ii) by an adjustment to the
number of First Shares acquired by the Purchase in the Company at
the First Closing, where such number of incremental First Shares
is calculated as the quotient of the First Purchase Price
Adjustment (plus interest) divided by the First Price. The
Company shall make such payment to the Purchasers within ninety
(90) days of the First Closing Date.
2.3. SECOND PURCHASE PRICE ADJUSTMENT.
(a) The Second Purchase Price shall be adjusted in accordance with
this SECTION 2.3 to reflect any negative change in the known
outstanding or pending Liabilities or Losses between the First
Closing Date and the Second Closing Date ("Second Negative
Change"). With respect to any Second Negative Change, the Company
shall either: (1) reimburse the Purchasers for such Second
Negative Change, or (2) the Purchasers may demand the Company to
issue additional Common Shares to the Purchasers at the Second
Price in the amount of such Second Negative Change.
(b) The Second Negative Change, if any, plus interest thereon at an
annual rate equal to eight percent (8%) from and including the
Second Closing Date to, but not including, the date of payment
shall be paid to the Purchasers at the sole discretion of the
Purchasers either: (i) as an indemnification payment to the
Purchasers from the Company or (ii) by an adjustment in the
number of Second Shares acquired by the Purchasers in the Second
Closing, where such number of incremental Second Shares is
calculated as the quotient of the Second Purchase Price
Adjustment (plus interest) divided the Second Price. The Company
shall make such payment to the Purchasers within ninety (90) days
of the Second Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
The Company hereby represents and warrants to AWK and Purchasers as follows:
3.1 ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Utah and is validly
existing in good standing in the jurisdictions set forth on Schedule 3.1(a) (the
"Foreign Qualification State") with all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted. The Company has, prior to the execution of this Agreement,
delivered to AWK true and complete copies of the certificate or articles of
incorporation and by-laws (or other comparable corporate charter documents), in
each case as in effect on the date hereof. The name of each Subsidiary and each
member of the Company's and each Subsidiary's Board of Directors and officers
and the position held by each are listed in SCHEDULE 3.1(B).
3.2 CORPORATE AUTHORITY. The Company has all requisite corporate power and
authority to enter into this Agreement and to perform its obligations under this
Agreement and the Transaction Agreements to which its is a party and to
consummate the transactions contemplated hereby or thereby. The execution,
delivery and performance of this Agreement and the Transaction Agreements to
which it is a party have been duly authorized by all necessary corporate action
on the part of the Company. This Agreement
has been duly executed and delivered by the Company and constitutes, and upon
execution thereof by all parties thereto, the Transaction Agreements to which
the Company is a party will constitute, the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms. The execution and delivery by the Company of this Agreement
and the Transaction Agreements to which it is a party do not, and the
consummation of the transactions contemplated hereby or thereby will not,
violate any provisions of the certificate of incorporation or by-laws of the
Company or violate any provision of or result in the acceleration of any
obligation or the creation of any Lien under, any Permit, agreement, indenture,
instrument, lease, order, arbitration award, judgment or decree to which either
the Company is a party or by which either the Company or any of its assets or
properties is bound. This Agreement has been duly approved by the Board of
Directors with all necessary consents and authority to enter into this Agreement
being granted by the Board of Directors. No further approval is needed from the
Company's Board of Directors for the Company to enter and implement this
Agreement.
3.3 FINANCIAL STATEMENTS. The Financial Statements present fairly in all
material respects the financial position and the results of operations on an
individual or consolidated basis, as applicable for (a) the Company and (b) the
Company and all Subsidiaries in the case of consolidated Financial Statements,
as of the dates thereof or for the periods referred to therein, as applicable,
in conformity with GAAP and the past accounting practices of the Company (to the
extent compatible with GAAP) consistently applied (except as set forth on
SCHEDULE 3.3(A)) subject in the case of interim financial statements to normal
year-end adjustments (which need not be projected on the interim financial
statements), and the Financial Statements make full and adequate provision for
all material obligations and liabilities (whether contingent or otherwise) of
the Company as of the date thereof to the extent required by GAAP. The books and
records of the Company are complete and accurate in all material respects. As of
the date of this Agreement, there are no material liabilities (whether
contingent or otherwise that would be required to be disclosed by GAAP) of,
relating to or affecting the Company or any of its respective assets and
properties, except (i) liabilities reflected or reserved against in the
Financial Statements, or (ii) liabilities disclosed in SCHEDULE 3.3(a). The
aggregate amounts of Indebtedness and cash of the Company and of the
Subsidiaries on a consolidated basis as of the date of this Agreement are as set
forth on SCHEDULE 3.3(b).
3.4 NO MATERIAL ADVERSE CHANGE. Except as listed on SCHEDULE 3.4(a), the
Company represents and warrants that since December 18, 2000, there has not been
any material adverse change in the condition (financial or otherwise), business,
assets, or results of operations of the Business in any such case, taken as a
whole and no event or condition has occurred or is known to the Company which
could reasonably be expected to have a Material Adverse Effect. In addition,
without limiting the foregoing, except as disclosed in SCHEDULES 3.4(a) AND
3.4(b) (Schedule 3.4(b) being solely with respect to VisionComm) and except for
the transactions contemplated by this Agreement and the Transaction Agreements,
since December 18, 2000, neither the Company nor any Subsidiary has:
(a) (i) declared, set aside or paid any dividend or other distribution
(in cash or other assets) in respect of the capital stock or other
equity interests of the Company or any Subsidiary of the Company
(ii) directly or indirectly redeemed, purchased or otherwise
acquired any such capital stock or other equity interests, or (iii)
made any other payment or distribution of cash or assets;
(b) authorized, issued, sold or otherwise disposed of, or granted any
option with respect to, or issued any security convertible into or
exchangeable for any shares of capital stock or other equity
interests of the Company, or modified or amended any right of any
holder of any outstanding shares of capital stock or other equity
interests or options with respect thereto of the Company;
(c) other than in the ordinary course of business consistent with
past practice, (i) increased salary, wages or other compensation
(including, without limitation, any bonuses, commissions and any
other payments) of any employee or consultant of the Company
whose annual salary, wages and such other compensation is, or
after giving effect to such change would be, in the aggregate
$50,000 or more per annum; or (ii) established, terminated or
modified any Employee Benefit Plan, employment contract or other
employee compensation arrangement;
(d) other than amounts under $20,000, (i) incurred any Indebtedness,
(ii) made or agreed to make any loans to any person or (iii) made or
agreed to make any voluntary purchase, cancellation, prepayment or
complete or partial discharge in advance of a scheduled payment date
with respect to, or waiver of any right of any Subsidiary under, any
Indebtedness of or owing to the Company;
(e) suffered any physical damage, destruction or other casualty loss
(whether or not covered by insurance) affecting any of the real or
personal property or equipment or the assets and properties of the
Company; except where such damage, destruction or other casualty
loss would not have a Material Adverse Effect;
(f) failed to pay or satisfy when due any obligation of the Company,
except when the failure would not have a Material Adverse Effect;
(g) acquired any business or material assets or properties of any person
(whether by merger, consolidation or otherwise) or disposed of,
leased, or incurred a Lien on, any material assets or properties of
the Company, in each case, other than acquisitions or dispositions
of inventory (including without limitation infusion pumps) in the
ordinary course of business of the Company consistent with past
practice;
(h) entered into, amended, modified in any material way terminated
(in whole or in part) or granted a waiver under or given any
consent with respect to (i) any contract which is required (or
had it been in effect on the date hereof would have been
required) to be disclosed pursuant to this Agreement (ii) any
Permit held by the Company; (iii) any Intellectual Property; or
(iv) made any capital expenditures in excess of $10,000 in the
aggregate, or incurred any obligation to make any such capital
expenditure;
(i) commenced, terminated or changed in any material way any line of
business of the Business or added any additional lines of business
to the Business;
(j) entered into any transaction with any stockholder, partner, member
or Affiliate of the Company, other than pursuant to any contract in
effect on December 31, 2000, and heretofore disclosed to AWK;
(k) made any change in the accounting methods or procedures of the
Company; or
(l) entered into any agreement to do any of the things described in
the preceding paragraphs.
3.5 ISSUANCE OF STOCK. Issuance to the Purchasers of the First Shares and
Warrants and the Second Shares pursuant to this Agreement will grant the
Purchasers good and valid title thereto, free and clear of all Liens, except for
such Liens as may be incurred by, or that result from the action of, the
Purchasers or its designees. Upon the issuance thereof in accordance with the
terms and conditions of the Subscription Agreement and the Warrants the
respective shares of Common Stock will have been duly authorized and validly
issued and will be fully paid and nonassessable. All currently issued and
outstanding shares of Common Stock are duly authorized, validly issued, fully
paid and nonassessable. The equity interest acquired by the Purchasers according
to this Agreement constitutes approximately no less than 75% equity interest in
the Company, on a Fully Diluted Basis. Except as set forth in SCHEDULE 3.5 there
are no outstanding options, warrants, convertible securities or similar rights
with respect to, or agreements, arrangements or understandings to issue any such
options, warrants, convertible securities or similar rights with respect to the
First Shares and Warrants and the Second Shares and there are no preemptive
rights or agreements, arrangements or understandings to issue preemptive rights
with respect to the issuance or sale of the First Shares and Warrants and the
Second Shares or any other shares in the capital or equity interests of the
Company.
3.6 PERMITS. The Company holds the respective permits, licenses, approvals and
authorizations listed on SCHEDULE 3.6 ("Permits"). The Permits are all permits,
licenses, approvals or authorizations as are currently necessary for the
operation of the Business (including the VisionComm Business) as presently
conducted; except for any failure to hold any of the foregoing which has not
had, and may not reasonably be expected to have, a Material Adverse Effect. Each
Permit is valid, binding and in full force and effect and neither the Company
nor any of its Subsidiaries is, or has received any notice that it is in default
(or with the giving of notice or lapse of time or both, would be in default)
under any Permit.
3.7 REAL PROPERTY LEASES. The Company does not own any real estate. SCHEDULE
3.7 hereto lists all leases of real property ("Real Property Leases") to which
the Company is a party, including all amendments, modifications or extensions
thereto. To the knowledge of the Company, all buildings, fixtures and other
structures or improvements leased by the Company pursuant to the Real Property
Leases are in good operating condition and repair (with the exception of normal
wear and tear), free from defects other than such minor defects as do not
interfere in any material respect with the continued use thereof in the conduct
of the Business. The Company has a valid and subsisting leasehold interest in
and the right to quiet enjoyment (or similar right under applicable law) to the
real property leased by it for the full term of the lease thereof. Each Real
Property Lease is a legal, valid and binding agreement, enforceable in
accordance with its terms, of the Company and, to the knowledge of the Company,
of each other person that is a party thereto, and except as set forth in
SCHEDULE 3.7, there is no, and the Company has no knowledge of any nor received
notice of any, default (or any condition or event which, after notice or lapse
of time or both, would constitute a default) thereunder. The Company owes no
brokerage commissions or finders' fees with respect to any Real Property Lease
or renewal or extension thereof. The Company has not assigned, sublet,
transferred, hypothecated or otherwise disposed of its interest in any Real
Property Lease. No penalties are accrued and unpaid under any Real Property
Lease, except for any penalties which would not have a Material Adverse Effect.
The Company has made available to AWK prior to the execution of this Agreement
true and complete copies of all Real Property Leases. To the knowledge of the
Company there are no condemnation or appropriation proceedings pending or
threatened against any real property occupied by the Company or the improvements
thereon. The Company has no knowledge of any claim, action or proceeding, actual
or threatened, against any real property occupied by the Company which would
have a Material Adverse Effect.
3.8 TANGIBLE PERSONAL PROPERTY. Except as disclosed in SCHEDULE 3.8 hereto and
except where the failure to be in good operating condition and repair would not
have a Material Adverse Effect, all tangible personal property used in the
Business (including without limitation any and all improvements on real estate
owned or leased by Company, regardless of whether or not such improvement is
qualified as part of such real estate or not) is in good operating condition and
repair (with the exception of normal wear and tear), suitable and adequate for
the continued use thereof in the conduct of the Business as presently conducted.
The Company is in possession of and has good and marketable title to, or has
valid leasehold interests in or valid rights to use, all tangible personal
property used in the conduct of the Business, other than inventory disposed of
since such
date in the ordinary course of business consistent with past practice of the
Company. All such tangible personal property is free and clear of all Liens,
except for Liens which would not have a Material Adverse Effect.
3.9 CONTRACTS. SCHEDULE 3.9 lists all contracts, agreements and instruments of
the to which the Company or any Subsidiary is bound. Each contract agreement or
instrument required to be disclosed in this SCHEDULE 3.9 is in full force and
effect and constitutes a legal, valid and binding agreement of, and is
enforceable in accordance with its terms against, the Company or respective
Subsidiary that is party thereto and, to the knowledge of the Company or the
relevant Subsidiary, each other party thereto; and except as disclosed in
SCHEDULE 3.9 no Subsidiary nor, to the knowledge of the Company or the
Subsidiaries, any other party to such contract agreement or instrument is, nor
has received notice that it is, in violation or breach of or default under any
such contract agreement or instrument (or with notice or lapse of time or both,
would be in violation or breach of or default under any such contract, agreement
or instrument). Except as disclosed on SCHEDULE 3.9, there are no contracts to
which any of the Subsidiaries is a party or by which any of their assets is
bound, which contracts are material to such Subsidiary or the Business, other
than contracts executed in the ordinary course of business.
3.10 EMPLOYEE BENEFIT PLANS. Except as set forth on SCHEDULE 3.10 ("Employee
Benefit Plans"), the Company is not a party to and does not participate in, or
contribute to any of the following for the benefit of the Company's Employees:
(i) any retirement, pension or deferred compensation plan, incentive
compensation plan, stock plan, vacation pay, severance pay, bonus or benefit
arrangement, insurance or hospitalization program or any other fringe benefit
arrangements that does not constitute an employee benefit plan; or (any
employment agreement not terminable upon 90 days or less written notice without
further liability). Each Employee Benefit Plan is in compliance in all respects
with all requirements of law applicable thereto and the respective requirements
of the governing documents thereof, except where noncompliance would not have a
Material Adverse Effect. The Company has not incurred any liability (nor, to the
knowledge of the Company does any condition exist or has any event occurred that
presents a material risk that any liability will be incurred) with respect to
any such Benefit Plan (other than liabilities reflected as such on the Balance
Sheet) that have or would reasonably be expected to have a Material Adverse
Effect. Each Employee Benefit Plan is fully and properly funded in accordance
with applicable law and the governing documents of such Employee Benefit Plan.
3.11 LITIGATION. Except as disclosed on SCHEDULE 3.11, there are no actions,
suits, arbitration proceedings, or other litigation investigations, inquiries or
proceedings ("Actions or Proceedings") pending or, to the knowledge of the
Company, threatened (a) against or affecting the Company other than actions,
suits, arbitration proceedings, or other litigation or proceedings, which taken
individually or in the aggregate do not and could not be reasonably expected to
have a Material Adverse Effect or (b) which challenge the validity of the
transactions contemplated by this Agreement. Except as disclosed on SCHEDULE
3.11, the Company is not subject to any order, judgment, decree, award,
investigation, inquiry or stipulation of or with any Governmental Authority
which
has, or may reasonably be expected to have, a Material Adverse Effect. The
Company is not in default with respect to any order, judgment, decree, award or
stipulation of any Governmental Authority and there are no unsatisfied judgments
against either of the Company. There is not a reasonable likelihood of an
adverse determination of any pending action or proceeding that would,
individually or in the aggregate, have a Material Adverse Effect. Prior to the
execution of this Agreement, the Company has delivered to AWK all responses of
counsel for the Company to auditors' requests for information for the preceding
three (3) years (together with any updates provided by such counsel) regarding
actions or proceedings pending or threatened against, relating to or affecting
either of the Company.
3.12 TAXES.
(a) Other than with respect to Taxes not yet due and payable, (i) all
Taxes due and owing by the Company (whether or not shown on any Tax
return) have been properly determined in accordance with applicable
rules and regulations and have been timely paid in full, or in
connection with amounts paid or owing to any employee, creditor,
independent contractor, shareholder, customer, supplier or other
third party, where required by law have been timely withheld,
deposited and paid in full and (ii) all Tax returns required to be
filed for taxable periods ending on or before December 31, 2000, by
or with respect to the Company, have been or (assuming cooperation
by AWK as required by this Agreement) will be duly and timely filed
in accordance with all applicable laws, and each such Tax return is
(or will be when filed) correct and complete in all material
respects.
(b) There is no pending or, to the knowledge of the Company, threatened
dispute, claim or issue raised, or expected to be raised or
assessed, by any Governmental Authority in any jurisdiction
concerning any Tax liability of the Company or otherwise known to
the Company. The Company has made available to AWK complete and
correct copies of all Tax returns, or portions thereof, filed by or
with respect to, and all Tax examination reports and statements of
deficiencies assessed against, or agreed to by or with respect to,
the Company.
(c) The Company has not received any written ruling of a Governmental
Authority related to Taxes or entered into any written and legally
binding agreement with a Governmental Authority related to Taxes.
3.13 INSURANCE. SCHEDULE 3.13 contains a true and complete list (including the
insurance policy face or coverage sheets) of all insurance policies (including
any self insurance programs, if any) currently in effect that insure the
Business or the Company or employees of the Company or affect or relate to the
ownership, use or operation of any of the material assets or properties of any
Subsidiary; except for any such insurance policy the absence of which would not
materially affect the Company or the Business. Each policy listed in SCHEDULE
3.13 is valid and binding and in full force and effect, all
premiums due thereunder have been paid when due and neither the Company, nor any
other person to whom such policy has been issued has received any notice of
cancellation or termination in respect of any such policy or is in default
thereunder, and the Company does not know of any reason or state of facts that
could lead to the cancellation of such policies. In the Company's reasonable
judgement, the insurance coverage provided by the insurance policies listed in
SCHEDULE 3.13 is reasonably adequate for the Business.
3.14 COMPLIANCE WITH LAWS. The Company has complied with and is in compliance
with all laws, statutes, regulations, rules and ordinances and other
pronouncements of any Governmental Authority applicable to the Business, the
Company or its assets or properties (including without limitation the Federal
Foreign Corrupt Practices Act) except where the failure to comply would not
have, and could not reasonably be expected to have, a Material Adverse Effect.
3.15 INTELLECTUAL PROPERTY. SCHEDULE 3.15 is an accurate and complete list of
all Intellectual Property used in the conduct of the Business. Except as set
forth in SCHEDULE 3.15, all of the Intellectual Property is owned by the Company
free and clear of all Liens, or the Company has a valid and binding license to
use such Intellectual Property. No other Intellectual Property is used in the
conduct of the Business. Except as disclosed in SCHEDULE 3.15, (i) any
registrations on behalf of the Company with and applications to Governmental
Authorities in respect of such Intellectual Property are valid and in full force
and effect and are not subject to the payment of any Taxes or maintenance fees
or the taking of any other actions by the Company to maintain its validity or
effectiveness, except where the failure to have such registration, to pay such
Taxes or maintenance fees or to any such other action does not have and could
not reasonably be expected to have a Material Adverse Effect, (ii) there are no
restrictions on the direct or indirect transfer of any license, held by the
Company in respect of such Intellectual Property, except for any such
restriction which does not have and could not reasonably be expected to have a
Material Adverse Effect, and (iii) the Company is not or has not received any
notice that it is in default (or with the giving of notice or lapse of time or
both, would be in default) under any license to use such Intellectual Property,
and the Company has no knowledge that such Intellectual Property is being
infringed by any other person. To the knowledge of the Company, the Company is
not infringing any Intellectual Property of any other person, and no litigation
is pending and no claim has been made or, to the knowledge of the Company, has
been threatened to such effect.
3.16 ACCOUNTS RECEIVABLE. All accounts receivable of the Company (i) have
arisen out of bona fide transactions in the ordinary course of business
consistent with past practice, and are payable on ordinary trade terms, (ii) to
the knowledge of the Company, are legal, valid and binding obligations of the
respective debtors enforceable in accordance with their respective terms, (iii)
to the knowledge of the Company, are not subject to any valid set-off or
counterclaim, and (iv) do not represent obligations for goods sold on
consignment, on approval or on a sale-or-return basis or subject to any other
repurchase or return arrangement.
3.17 CONSENTS. Except as set forth in SCHEDULE 3.17, no notice to, filing with,
authorization of, exemption by or consent of any Governmental Authority or any
other
person is required in order for either of the Company to consummate the
transactions contemplated hereby, except for any consent, the failure of which
to be obtained, would not have and could not reasonably be expected to' have a
Material Adverse Effect.
3.18 AFFILIATES, Except as disclosed in SCHEDULE 3.18, (i) there is no
Indebtedness owed to any Affiliate, (ii) there is no Indebtedness owed by any
Affiliate, (iii) neither any current or former Affiliate provides or causes to
be provided any assets, properties, services or facilities to the Company, and
(iv) the Company provides or causes to be provided any assets, services or
facilities to any current or former Affiliate.
3.19 CORPORATE BOOKS AND RECORDS. The minute books and other similar records of
the Company set forth in SCHEDULE 3.19 and made available to AWK prior to the
execution of this Agreement contain a true, complete and current record, in all
material respects, of all action taken at all meetings and by all written
consents in lieu of meetings of directors, members, stockholders, the management
committee or boards of directors, subcommittees and committees of the boards of
directors of the Company.
3.20 EMPLOYEES; LABOR RELATIONS. The Company is not engaged in any unfair labor
practice as determined by applicable local law. There is (i) no unfair labor
practice complaint pending or, to the knowledge of the Company, threatened
against the Company; (ii) no grievance, arbitration or other proceeding arising
out of or under trade union contracts pending or, to the knowledge of the
Company, threatened against the Company, which has or could reasonably be
expected to have a Material Adverse Effect, and (iii) no strike, labor dispute,
slowdown or stoppage pending or, to the knowledge of the Company, threatened
against the Company.
3.21 BUSINESS RELATIONSHIPS. Except as listed on SCHEDULE 3.4. no business
relationship of the Company with any customer, supplier or any group of
customers or suppliers whose purchases or sales, as the case may be, are
individually or in the aggregate material to the business of the Company has
been, or to the knowledge of the Company, has been threatened to be, terminated,
canceled, limited or changed or modified, in a way, which has or could
reasonably be expected to have a Material Adverse Effect, and, to the knowledge
of the Company, there exists no present condition or state of facts or
circumstances with respect to such business relationship that would have a
Material Adverse Effect, or prevent any Subsidiary from conducting its business
after the consummation of the transactions contemplated by this Agreement, in
substantially the same manner in which it has heretofore been conducted.
3.22 INVENTORY. All inventory of the Company reflected on the Financial
Statements consisted, and all such inventory acquired since December 31, 2000
consists, of a quality and quantity usable and salable in the ordinary course of
business, except as disclosed in SCHEDULE 3.22 and except to the extent properly
reserved for on the December 31 Consolidated Balance Sheet or the First Closing
Date Balance Sheet, as the case may be. All items included in the inventory of
the Company are the property of the Company free and clear of any Lien (except
for Liens which would not have a Material Adverse Effect), are not held by the
Company on consignment from others and conform in all material
respects to all standards applicable to such inventory or its use or sale
imposed by Governmental Authorities.
3.23 CONFLICTING AGREEMENTS. Neither the Company or any of its Affiliates (nor
any investment banker, financial advisor, attorney, accountant or other person
retained by or acting for or on behalf of either the Company or any Affiliate)
has entered into any agreement with any third party regarding any transaction
involving the Company which conflicts with the transactions contemplated hereby
or which could result in AWK, the Purchasers or their respective members,
officers, director, employee, agent or Affiliate of any of them being subject to
any claim for liability to said third party as a result of entering into this
Agreement or any Transaction Agreement or consummating the transactions
contemplated hereby or thereby.
3.24 KNOWLEDGE. Wherever used in this Agreement, the "knowledge" means the
knowledge of the officers, executives, partners, members or other persons in a
similar position or having similar powers and duties of the Company, as the case
may be, in each case after reasonable inquiry.
3.25 BROKERS. The Company represents that no broker or finder has acted for it
in connection with this Agreement, the Transaction Documents or the transactions
contemplated hereby and thereby, and that no broker or finder is entitled to any
brokerage or finder's fee or other commission based on agreements, arrangements
or understandings made by the Company.
3.26 EQUITY RIGHTS. Schedule 3.26 is a complete and accurate list and
description of all the obligations of the Company with respect to outstanding
warrants or options, re-pricing of the Company's shares, registration rights
granted by the Company, or any similar obligations that have an effect on the
number or the value of the Company's issued and outstanding shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
AWK represents and warrants to the Company as follows:
4.1 ORGANIZATION AWK is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation.
4.2 CORPORATE AUTHORITY. AWK has all requisite corporate power and authority
to enter into this Agreement and the Transaction Agreements to which it is a
party and to perform its obligations under this Agreement and the Transaction
Agreements and to consummate the transactions contemplated hereby or thereby.
AWK's execution, delivery and performance of this Agreement and the Transaction
Agreements to which it is a party have been duly authorized by all necessary
corporate action on the part of AWK. This Agreement has been duly executed and
delivered by AWK and constitutes,
and upon execution thereof by all parties thereto, the Transaction Agreements to
which AWK is a party will constitute, the legal, valid and binding obligation of
AWK, enforceable in accordance with their respective terms. The execution and
delivery by AWK of this Agreement and the Transaction Agreements to which it is
a party does not, and the consummation of the transactions contemplated hereby
or thereby will not, violate any provisions of the certificate of incorporation
or by-laws of AWK or violate any provision of or result in the acceleration of
any obligation or the creation or any Lien under any agreement, indenture,
instrument, lease, Lien, order, arbitration award, judgment or decree to which
AWK is a party or by which it or any of its properties is bound.
4.3 CONSENTS. Except as set forth on SCHEDULE 4.3, no notice to, filing with,
authorization of, exemption by, or consent of any person, entity, or
Governmental Authority is required in order for AWK to consummate the
transactions contemplated hereby, except for any consent, the failure of which
to be obtained, would not have and could not reasonably be expected to have a
material adverse effect on the Company.
4.4 FINANCING. Purchaser has, or will have prior to the First Closing and the
Second, sufficient cash, available lines of credit or other sources of
immediately available funds to enable it to make payment of the First Purchase
Price and any other amounts to be paid by it hereunder, when and as required to
be made pursuant to this Agreement and the Subscription Agreement. 4.5
DISCLAIMER. Except for the representations and warranties specifically set forth
in this ARTICLE IV, AWK makes no (and Purchaser shall not in any manner
whatsoever be deemed or be construed as having made any) representation or
warranty to the Company hereunder or otherwise, express or implied.
4.6 BROKERS. AWK represents that no broker or finder has acted for it in
connection with this Agreement, the Transaction Documents or the
transactions contemplated hereby and thereby, and that no broker or finder
is entitled to any brokerage or finder's fee or other commission based on
agreements, arrangements or understandings made by AWK.
4.7 LITIGATION. Except as disclosed on SCHEDULE 4.7, there are no actions,
suits, arbitration proceedings, or other litigation investigations,
inquiries or proceedings ("Actions or Proceedings") pending or, to the
knowledge of the AWK, threatened (a) against or affecting AWKother than
actions, suits, arbitration proceedings, or other litigation or
proceedings, which taken individually or in the aggregate do not and could
not be reasonably expected to have a Material Adverse Effect or (b) which
challenge the validity of the transactions contemplated by this Agreement.
Except as disclosed on SCHEDULE 4.7, AWK is not subject to any order,
judgment, decree, award, investigation, inquiry or stipulation of or with
any Governmental Authority which has, or may reasonably be expected to
have, a Material Adverse Effect. AWK is not in default with respect to any
order, judgment, decree, award or stipulation of any Governmental
Authority and there are no unsatisfied judgments against either of AWK.
There is not a reasonable likelihood of an
adverse determination of any pending action or proceeding that would,
individually or in the aggregate, have a Material Adverse Effect. Prior to
the execution of this Agreement, AWK has delivered to Company all
responses of counsel for the Company to auditors' requests for information
for the preceding three (3) years (together with any updates provided by
such counsel) regarding actions or proceedings pending or threatened
against, relating to or affecting AWK.
4.8 RELEVANT PATENTS. The Patents listed on Schedule 4.8 are relevant to
the business of the Company and are owned by AWK.
ARTICLE V
COVENANTS OF SELLER PRIOR TO
THE FIRST CLOSING AND THE SECOND CLOSING
The Company agrees that from the date hereof to the First Closing Date:
5.1 ACCESS TO INFORMATION/COOPERATION. the Company shall, during normal
business hours and without unreasonable interference with business operations of
any Company: (a) give and shall cause to give AWK and AWK's representatives
access, to the books and records, files, employees, consultants and physical
facilities of the Company; and (b) cooperate with AWK with respect to the
consummation of the transactions contemplated hereby and the transition of the
Business from the Company to AWK and shall make all information reasonably
requested and management of the Subsidiaries available to AWK for such purposes.
5.2 INTERIM CONDUCT OF BUSINESS. The Company shall use all commercially
reasonable efforts to (i) preserve intact the present business organization and
personnel of the Company, and (ii) preserve the present goodwill and
advantageous relationships of the Company. The Company shall continue to operate
and conduct business only in the usual, regular and ordinary course and manner
consistent with past practice. The Company shall maintain respective books,
accounts and records in the usual, regular and ordinary manner. The Company
shall continue, the insurance described on SCHEDULE 3.13 and not allow any
breach of such insurance policies or agreements to occur or exist. Other than in
the ordinary course of business, and except as set forth in SCHEDULE 5.2 or as
may otherwise be required by applicable law, no increase or other material
change shall be made in the compensation arrangements for any Employee from that
in effect as of December 18, 2000. The Company shall refrain from: (i) amending
its certificates or articles of organization or incorporation or by laws (or
other comparable charter documents) or taking any action with respect to any
such amendment or any reorganization, liquidation or dissolution of any such
entity (except as contemplated in Sections 7.1, 7.2 and 9.8; (ii) taking any of
the actions listed in SECTION 3.4 hereof; (iii) making any representation or
promise, oral or written, to Employee concerning any Employee Benefit Plan,
except for statements as to the rights or accrued benefits of any Employee under
the terms of any Employee Benefit Plan or the obligations of AWK pursuant to
SECTION 9.10; (iv) (A) taking or omitting or agreeing or committing to omit
any action that would make any representation or warranty of the Company
hereunder inaccurate in any material respect at any time between the date hereof
and the First Closing; or (B) taking any action or course of action inconsistent
with the compliance with the covenants and agreements of the Company herein or
which might materially adversely affect the interests of the Purchasers
hereunder; and (v) entering into any agreement to engage in any of the
activities listed in this SECTION 5.2.
5.3 CONSENTS AND APPROVALS. The Company shall make all filings, applications,
statements and reports to all Governmental Authorities which are required to be
made prior to the First Closing Date by or on behalf of the Company, or jointly
with AWK, in order to effectuate the transactions contemplated by this
Agreement. The Company will use all commercially reasonable efforts to cause the
First Closing to occur.
5.4 NOTICE OF CERTAIN EVENTS. To the extent the Company has knowledge thereof,
the Company shall promptly notify AWK of: (a) any notice or other communication
from any Governmental Authority in connection with the transactions contemplated
by this Agreement; (b) any actions, suits, claims, investigations or proceedings
commenced or threatened against, relating to or involving or otherwise affecting
the Company that, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to this Agreement; or (c) any breaches
of Sections 5.2 or 5.5. Promptly following receipt thereof by the Company, the
Company shall give AWK copies of any notice received by the Company concerning
an employee benefit plan of the Company or from any Governmental Authority or
other person alleging any violation of any law, statutes, rules, regulations,
orders and other pronouncements of any Governmental Authority.
5.5 OTHER DISCUSSIONS. Upon execution of this Agreement, the Company will not
take, directly or indirectly, any action to initiate, assist, solicit,
receive, negotiate, encourage or accept any offer or inquiry from any
person (a) to engage in any Business Combination, (b) to reach any
agreement or understanding (whether or not such agreement or understanding
is absolute, revocable, contingent or conditional) for, or otherwise
attempt to consummate, any Business Combination or (c) to furnish or cause
to be furnished any information with respect to the Company or any such
Affiliate (or any such person acting for or on their behalf) knows or has
reason to believe is in the process of, or may be, considering any
Business Combination with the Company. If the Company or any Affiliate (or
any such person acting for or on their behalf) receives from any person
(other than AWK or the Purchasers) any offer, inquiry or informational
request the Company will promptly advise such person, by written notice,
of the terms of is SECTION 5.5, will promptly, orally and in writing,
advise AWK and the Purchasers of receipt of an offer, inquiry or
informational request, and, except to the extent barred by a
confidentiality agreement that was executed prior to the date of this
Agreement, will promptly, orally and in writing, advise AWK and the
Purchasers of the essential terms thereof (including, without limitation,
the identity of the person making such offer, inquiry or request).
5.6 DUE DILIGENCE. In order to facilitate the due diligence investigation to
be conducted by AWK and the Purchasers, the Company will cause to be made
available to AWK such information available to the Company that AWK may
reasonably request relating to the Acquisition.
5.7 The Company and its affiliates agree that from the date of entering this
Agreement until the Agreement is Terminated, none of The Company or the
Company's directors, affiliates, employees, or other agents and
representatives shall without the written consent of AWK, directly or
indirectly (a) sell or offer to sell to a third party, or (b) solicit a
competitive bid from a third party to purchase, any of the issued and
outstanding share capital of the Company, nor shall any of them directly
or indirectly (c) sell all or a material portion of the assets of the
Company except in the ordinary course of business, (d) conduct any merger
with any entity and/or the acquisition or sale of any assets, or any
negotiations or discussions thereof; or (e) engage in or continue any
discussions or negotiations with any person or entity that has made or who
may make a bid for any such assets or share capital. The warranties
contained in this paragraph apply to all transactions. For purposes
hereof, the transfer of a controlling interest in any legal entity that
owns equity in the Company shall be deemed an improper transfer of the
Company's share capital under this paragraph.
5.6 COVENANTS WITH RESPECT TO SECOND CLOSING. The Company agrees that from the
First Closing Date until the Second Closing Date, the Company will comply with
Section 5.1, 5.3, 5.4, 5.5 and this Section 5.7 of this Agreement.
ARTICLE VI
COVENANTS OF AWK PRIOR TO
FIRST CLOSING AND THE SECOND CLOSING
AWK agrees that from the date hereof to the First Closing Date and from
the First Closing Date to the Second Closing Date:
6.1 CONSENTS AND APPROVALS. AWK shall make all filings, applications,
statements and reports to all Governmental Authorities which are required to be
made prior to the First Closing Date and the Second Closing Date by or on behalf
of AWK, or jointly with the Company, in order to effectuate the transactions
contemplated by this Agreement and the Transaction Agreements.AWK shall use all
commercially reasonable efforts to cause the First and Second Closings to occur.
6.2 NOTICE OF CERTAIN EVENTS. To the extent AWK has knowledge thereof AWK
shall promptly notify the Company of:
(a) any notice or other communication from any Governmental Authority in
connection with the transactions contemplated by this Agreement; and
(b) any actions, suits, claims, investigations or proceedings commenced
or threatened against,, relating to or involving or otherwise
affecting AWK
that, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to this Agreement.
6.3 INTERIM CONDUCT. AWK shall refrain from:(a) taking or omitting or agreeing
or committing to omit any action that would make any representation or
warranty of AWK hereunder including those made in Article III inaccurate
in any material respect at any time between the date hereof and the First
Closing Date and the Second Closing Date; or (b) taking any action or
course of action inconsistent with the compliance with the covenants and
agreements of AWK and the Purchasers herein or which might materially
adversely affect the interests of the Company hereunder.
6.4 ACCESS TO INFORMATION/COOPERATION. AWK shall, during normal business hours
and without unreasonable interference with business operations of AWK: (a)
give and shall cause to give the Company and the Company's representatives
access, to the books and records, files, employees, consultants and
physical facilities of AWK; and (b) cooperate with the Company with
respect to the consummation of the transactions contemplated hereby and
shall make all information reasonably requested.
6.5 DUE DILIGENCE. In order to facilitate the due diligence investigation to
be conducted by the Company, AWK will cause to be made available to the
Company such information available to AWK that Company may reasonably
request relating to the Acquisition.
6.6 COVENANTS WITH RESPECT TO SECOND CLOSING. AWK agrees that from the First
Closing Date until the Second Closing Date, AWK will comply with Section
6.1, 6.2, 6.3, 6.4 and 6.5 of this Agreement.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE PURCHASERS AND AWK AT THE FIRST
CLOSING AND THE SECOND CLOSING
7.1 The obligations of AWK and the Purchasers at the First Closing under
this Agreement are, at the option of AWK, subject to satisfaction of the
following conditions precedent on or before the First Closing Date:
(a) DUE DILIGENCE. AWK shall have completed due diligence ("Due
Diligence") to the satisfaction of AWK, in its sole discretion.
(b) WARRANTIES TRUE OF BOTH PRESENT DATE AND FIRST CLOSING DATE. The
representations and warranties of the Company contained in ARTICLE
III (i) shall be true in all material respects on and as of the date
of this Agreement and (ii) shall be true in all material respects on
and as of the First Closing Date with the same force and effect as
though made on and as of the First Closing Date; provided that any
representation and warranty
already qualified herein by a materiality standard or the Material
Adverse Effect shall be true in all respects on the date hereof and
as of the First Closing Date.
(c) COMPLIANCE WITH AGREEMENTS AND COVENANTS; CERTIFICATE. The Company
shall, in all material respects, have performed all of their
respective obligations and agreements and complied with all of their
covenants contained in this Agreement to be performed and complied
with by it on or prior to the First Closing Date and the Company
shall have delivered to AWK (i) a certificate, dated as of the First
Closing Date, executed by a duly authorized officer of each the
Company, certifying as to compliance with SECTION 7.1; (ii) an
opinion of the Company's counsel in a form acceptable to AWK; and
(iii) a bring down letter from the Company's accountant in a form
acceptable to AWK.
(d) GOVERNMENTAL AUTHORITY AND THIRD PARTY CONSENTS. AWK shall have
received any necessary consents or approvals required from any
Governmental Authority, stockholder or third party in order to
effectuate the transactions contemplated by this Agreement.
(e) ACTIONS OR PROCEEDINGS. There shall not be in effect on the First
Closing Date any law, statute, rule, regulation, order, judgment,
decree, award, ordinance or other pronouncement of any Governmental
Authority restraining, enjoining, or otherwise prohibiting or making
illegal the consummation of the transactions contemplated by this
Agreement. There shall not be pending or threatened on the First
Closing Date any action or proceeding or any other action which
could reasonably be expected to result in the issuance of any such
order, judgment, decree, award or the enactment, promulgation or
deemed applicability to AWK or the Company, or the transactions
contemplated by this Agreement of any such order, judgment, decree,
award, law, statute, rule, regulation, ordinance or other
pronouncement of any Governmental Authority. The litigation,
employee claims, and property lease disputes, listed on Schedules
3.11, 3.20, and Schedule 7.1(e) have been successfully settled by
the Company to the full satisfaction of the AWK.
(F) AMEX RULE 710 WAIVER. The American Stock Exchange shall have granted
a waiver of notice to shareholders regarding the First Closing
pursuant to AMEX Rule 710 ("Waiver") or the necessary shareholders'
approval has been obtained. In case AMEX does not grant the Waiver,
Purchasers may choose to (1) purchase twenty percent (20%) of the
oustanding voting stock of the Company on a Fully Diluted Basis
provided: (a) that Buyer will control the majority of the seats on
Chequemate's Board of Directors, as described in Section 7.1(h)
below and (b) that the holders of the majority of the oustanding
voting stock of Chequemate have provided their written consent
approving the Acquisition; or (2) purchase with the First Purchase
Price and the Second
Purchase Price approximately no less than seventy-five percent (75%)
of the oustanding voting stock of the Company on a Fully Diluted
Basis, provided that the holders of the majority of the oustanding
voting stock of Chequemate have provided their written consent
approving the Acquisition.
(g) WAIVER AND RELEASE BY CERTAIN SHAREHOLDERS. The Company shall have
entered into the respective Waiver and Release Agreements with the
VisionComm Shareholders in the substantial form attached hereto as
EXHIBIT C pursuant to which (1) the VisionComm Shareholders will
surrender to the Company for cancellation all of the promissory
notes and warrants issued to them in or around December 2000; and
(2) the VisionComm Shareholders will waive any past, present or
future legal claims against the Company, Purchasers or AWK. In
consideration therefor, and for the promise by the VisionComm
Stockholders to enter into a waiver and release satisfactory to the
Company at its sole discretion, the Company shall have issued an
additional number of shares of Common Stock such that, when combined
with the shares of Common Stock issued contemporaneously with the
aforementioned warrants and promissory notes, the number of shares
of Common Stock held by the VisionComm Shareholders is Twelve
Million Eight Hundred Thousand (12,800,000). The Company and
VisionComm shall have performed their respective obligations and
such Waiver and Release to the satisfaction of the AWK.
(h) NEW MEMBERS ELECTED TO BOARD OF DIRECTORS. The Parties shall have
taken all necessary steps under the Utah Revised Business
Corporation Act, the rules of the American Stock Exchange and the
rules and regulations promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") to elect AWK's nominees to
the board of directors of the Company. The Company agrees to accept
the resignations from no fewer than that number of directors on the
Company's incumbent board of directors that will give AWK's nominees
to the board a majority on the Company's Board of Directors. Subject
to the fiduciary duties of the Company's incumbent directors, AWK
may also request (but shall not be obligated to so request) that the
Company increase the size of its Board of Directors and fill the
vacancies created thereby with AWK's nominees, such that immediately
thereafter, AWK's nominees shall comprise a majority of the
Company's Board of Directors.
(i) DIRECTORS. At Closing, the current directors of the Company shall
nominate, and agree to vote in favor of the election of (i) AWK
nominees to the Company's Board of Directors. Thereafter, the other
remaining board members agree to (i) amend the By-laws to permit the
Company to have one or more directors and (ii) upon request of AWK,
tender their written resignations.
(j) SETTLEMENT OF LITIGATION. The Company shall have settled to the
satisfaction of AWK (as determined in the sole discretion of AWK)
all of the litigation matters listed in Schedule 7.1(i) hereto and
made a part hereof. The Company shall not execute any settlement
documents without the prior written approval of AWK, which may be
withheld in AWK's sole discretion.
(k) REVERSE SPLIT OF SHARES OF COMMON STOCK. If so requested in writing
at least 10 days prior to the First Closing in preparation to the
First Closing, the Company shall use its best efforts to cause the
Reverse Stock Split.
(l) CROOKS HOLLOW AND PALADIN EQUITY FACILITY. That certain Paladin
Credit Agreement between the Company and Paladin Trading Limited
dated August 31, 2000 and that certain Common Stock Purchase
Agreement between the Company and Crooks Hollow Road, LLC, dated MAY
10, 2000 have been revised to the AWK's satisfaction.
(m) ADDITIONAL CONDITIONS. Such other conditions as AWK shall reasonably
request or which are necessary to consummate the transactions
contemplated hereby.
7.2 The obligations of AWK and the Purchasers at the Second Closing under
this Agreement are, at the option of AWK, subject to satisfaction of the
following conditions precedent on or before the Second Closing Date:
(a) DUE DILIGENCE. The Company shall have completed to AWK's
satisfaction due diligence more extensive and in addition to the Due
Diligence ("Further Due Diligence").
(b) WARRANTIES TRUE OF BOTH PRESENT DATE AND THE SECOND CLOSING DATE.
The representations and warranties of the Company contained in
ARTICLE III (i) shall be true in all material respects on and as of
the date of this Agreement and (ii) shall be true in all material
respects on and as of the Second Closing Date with the same force
and effect as though made on and as of the Second Closing Date;
provided that any representation and warranty already qualified
herein by a materiality standard or the Material Adverse Effect
shall be true in all respects on the date hereof and as of the First
Closing Date.
(c) COMPLIANCE WITH AGREEMENTS AND COVENANTS; CERTIFICATE. The Company
shall, in all material respects, have performed all of their
respective obligations and agreements and complied with all of their
covenants contained in this Agreement to be performed and complied
with by it on or prior to the Second Closing Date (including without
limitation the covenants and agreements contained in SECTIONS 5.1,
5.2, 5.3, 5.4, 5.5 and 5.7); and the Company shall have delivered to
AWK (i) a certificate, dated as of the Second Closing Date, executed
by a duly authorized officer of
the Company, certifying as to compliance with SECTION 7.1(C); (ii)
an opinion of the Company's counsel in a form acceptable to AWK; and
(iii) a bring down letter from the Company's accountant in a form
acceptable to AWK.
(d) GOVERNMENTAL AUTHORITY AND THIRD PARTY CONSENTS. AWK shall have
received any necessary consents or approvals required from any
Governmental Authority, stockholder or third party in order to
effectuate the transactions contemplated by this Agreement.
(e) ACTIONS OR PROCEEDINGS. There shall not be in effect on the Second
Closing Date any law, statute, rule, regulation, order, judgment,
decree, award, ordinance or other pronouncement of any Governmental
Authority restraining, enjoining, or otherwise prohibiting or making
illegal the consummation of the transactions contemplated by this
Agreement. There shall not be pending or threatened on the Second
Closing Date any action or proceeding or any other action which
could reasonably be expected to result in the issuance of any such
order, judgment, decree, award or the enactment, promulgation or
deemed applicability to AWK or the Company, or the transactions
contemplated by this Agreement of any such order, judgment, decree,
award, law, statute, rule, regulation, ordinance or other
pronouncement of any Governmental Authority.
(f) ADDITIONAL CONDITIONS. Such other conditions as AWK shall reasonably
request or which are necessary to consummate the transactions
contemplated hereby.
ARTICLE VIII
CONDITION PRECEDENT TO OBLIGATIONS OF SELLER
8.1 REPRESENTATIONS IN FORCE. The obligations of the Company under this
Agreement are, at the option of the Company not to be unreasonably
withheld, subject to the satisfaction that the representations and
warranties of AWK contained in ARTICLE IV (a) shall be true in all
material respects on and as of the date of this Agreement, and (b) shall
also be true in all material respects on and as of the First Closing Date
and the Second Closing Date, as applicable, with the same force and effect
as though made by AWK on and as the date of this Agreement; provided that
any representation and warranty contained in ARTICLE IV already qualified
herein by a materiality standard or the Material Adverse Effect shall be
true in all respects on the date of this Agreement, as of the First
Closing Date and as of the Second Closing Date, as applicable.
8.2 DUE DILIGENCE. The Seller shall have completed due diligence ("Seller Due
Diligence") to the satisfaction of the Seller.
ARTICLE IX
ADDITIONAL COVENANTS AND AGREEMENTS
9.1 OTHER INSTRUMENTS; COOPERATION AND ASSURANCES. Each party hereto agrees to
execute and deliver (whether prior to, on or after First Closing) all such
further documents and instruments and do all acts and things as the other party
may reasonably require to effectively carry out the transactions contemplated by
this Agreement and the Transaction Agreements.
9.2 RECORDS. Each Party shall provide the other party with access to all
relevant documents and other information pertaining to the Business which are
needed by such other party for the purposes of preparing tax returns or
responding to an audit by any Governmental Authority or for any other reasonable
purpose. Such access will be during normal business hours.
9.3 PUBLICITY. The parties shall confer with each other prior to making any
public announcement or release concerning this Agreement, the Transaction
Documents or the transactions contemplated hereby and thereby and shall promptly
cooperate with each other to the extent practicable in issuing any such
announcements or releases. To the extent permitted under applicable law and
under the Exchange Act, if the parties file copies or this Agreement or any
other Transaction Documents, and if reasonably requested by the other Party
(other than a VisionComm Shareholder), they shall file redacted copies hereof in
satisfaction of their reporting obligations.
9.4 EXPENSES. Except as provided in the next sentence, each party hereto shall
bear its own expenses with respect to this transaction. The Company and AWK
shall each pay one-half of all sales, use, stamp, transfer, service, recording,
and like taxes or fees, if any,
imposed by any Governmental Authority required to be paid in connection with the
consummation of the transactions contemplated by this Agreement.
9.5 CONFIDENTIAL INFORMATION. Except to the extent required by any provision
hereof or by applicable law or required in connection with any tax or securities
filing, or otherwise approved by the other party in advance, for a period of
five (5) years from the First Closing Date, all of the current officers and
directors of the Company shall retain in strict confidence, and shall not use
for the benefit of itself or others, any confidential and proprietary
information relating solely to the Business of either the Company of VisionComm,
customer lists, pricing policies, marketing plans or strategies, and product
development techniques or plans; provided, however, that the restrictions of
this Section shall not apply to information which is or becomes public knowledge
or otherwise generally known in the trade through no fault of the Company, or
shall be subject to an order of a court of competent jurisdiction.
9.6 ENFORCEMENT OF RESTRICTIVE COVENANTS.
(a) If the Company breaches, or threatens to commit a breach of, any
of the provisions of SECTION 9.6 ("Restrictive Covenants"), AWK
shall have, in addition to any other rights or remedies available
to AWK at law or in equity, the right and remedy to have the
Restrictive Covenants specifically enforced, it being
acknowledged and agreed that any such breach or threatened breach
will cause irreparable injury to AWK and that money damages will
not prove an adequate remedy to AWK.
(b) If any court determines that any of the Restrictive Covenants, or
any part thereof, is invalid or unenforceable, the remainder of the
Restrictive Covenants shall not thereby be affected and shall be
given full effect, without regard to the invalid portions.
9.7 MANAGEMENT LIAISON. AWK will appoint and authorize a liaison to represent
AWK from the date of this Agreement until the First Closing in all matters
where the Company under the Agreement must seek approval or consent of
AWK.
ARTICLE X
FIRST CLOSING
10.1 FIRST CLOSING. The First Closing shall take place on the tenth (10th)
business day after all conditions precedent to the First Closing set forth in
ARTICLES VII and VIII to this Agreement have been satisfied or waived ("First
Closing Date").
10.2 DELIVERIES BY THE COMPANY. At the First Closing, the Company will
deliver to AWK or its designees, the following:
(a) stock certificates, properly endorsed, representing the First Shares
and Warrants, together with all necessary instruments of transfer
and such other documents as may be required by AWK to evidence AWK's
full and unrestricted ownership of the First Shares and Warrants;
(b) the certificate, opinion, and bring down letter referred to in
SECTION 7.1(C)
(c) certified copies of resolutions of each the Company's Board of
Directors authorizing the Company to consummate the First Closing;
(d) certificate of Good Standing (or comparable documentation) of the
Company;
(e) executed counterparts of the Subscription Agreement;
(f) such other documents as AWK's counsel shall reasonably request or
which are necessary to consummate the transactions contemplated
hereby.
10.3 DELIVERIES BY AWK. At the First Closing, AWK will deliver to the Company,
the following:
(a) the First Purchase Price;
(b) the certificate referred to in SECTION 7.2;
(c) certified copies of resolutions of AWK's Board of Directors
authorizing AWK to consummate the First Closing;
(d) executed counterparts of the Subscription Agreement;
(e) such other documents as the Company' counsel shall reasonably
request or which are necessary to consummate the transactions
contemplated hereby.
ARTICLE XI
SECOND CLOSING
11.1 SECOND CLOSING. The Second Closing shall take place after all conditions
precedent to the Second Closing set forth in ARTICLES VI and VII to this
Agreement have been satisfied or waived, and on a date that AWK and the Company
agree, but in no case later then four weeks after the First Closing ("Second
Closing Date").
11.2 DELIVERIES BY THE COMPANY. At the Second Closing, the Company will deliver
to the Purchasers or AWK, respectively, the following:
(a) stock certificates, properly endorsed, representing the Second
Shares and Warrants, together with all necessary instruments of
transfer and such other documents as may be required by the
Purchasers to evidence the Purchasers' full and unrestricted
ownership of the Second Shares and Warrants;
(b) the certificates, opinions, and bring down letters referred to in
SECTION 7.1
(c) certified copies of resolutions of the Company's Board of Directors
authorizing the Company to consummate the Second Closing;
(d) certificate of Good Standing (or comparable documentation) of the
Company;
(e) [reserved]
(f) such other documents as AWK's counsel shall reasonably request or
which are necessary to consummate the transactions contemplated
hereby.
11.3 DELIVERIES BY AWK. At the Second Closing, AWK will deliver to the Company,
the following:
(a) the Second Purchase Price;
(b) the certificate referred to in SECTION 7.2;
(c) certified copies of resolutions of AWK's Board of Directors
authorizing AWK to consummate the Second First Closing;
(d) executed counterparts of the Subscription Agreement;
(e) such other documents as the Company' counsel shall reasonably
request or which are necessary to consummate the transactions
contemplated hereby.
ARTICLE XII
TERMINATION
12.1 TERMINATION. This Agreement may be terminated at any time on or prior to
the First Closing Date:
(a) With the mutual consent of the Company and AWK; or
(b) By the Company or AWK, if the First Closing shall not have taken
place on or before the fourth monthly anniversary of the date
hereof, or such later date as may be approved in writing by AWK and
the Company.
12.2 EFFECT OF TERMINATION. Except as permitted by SECTION 12.1, if termination
shall result from the willful failure of either Party to fulfill a condition to
the performance of the obligations of the other party, the failure of either
Party to perform a covenant of this Agreement, or the breach by either party
hereto of any representation or warranty or agreement contained herein in a
willful or grossly negligent manner, such party shall be fully liable for any
and all Losses incurred or suffered by the other parties.
12.3 DEFAULT; RETURN OF FIRST PURCHASE PRICE. If, after the First Closing, AWK
discovers that the Company has not complied with the terms of this Agreement or
any of the
Transaction Agreements, AWK and the Purchasers shall have the right to
indemnification of the First Purchase Price by the Company and shall have the
right to be indemnified all reasonable expenses related to the preparation and
completion of the transactions envisioned by this Agreement and the Transaction
Agreements.
ARTICLE XIII
SURVIVAL AND REMEDY OF INDEMNIFICATION
13.1 SURVIVAL. The covenants, agreements, representations or warranties of the
parties hereto contained in this Agreement or in any certificate or other
writing delivered pursuant to, or in connection with, this Agreement shall
survive the Second Closing Date for a period of five (5) years, except for
Section 3.12, which shall survive the Second Closing Date for a period of six
(6) years.
13.2 INDEMNIFICATION BY THE COMPANY. The Company shall indemnify the Purchasers
and AWK and, without duplication, each of its Affiliates, and each of their
respective officers, directors, employees and representatives (collectively,
"Indemnified Parties"), against, and the Company agrees to defend and hold the
Indemnified Parties harmless from, any and all Losses incurred or suffered by
the Indemnified Parties (or any combination thereof) arising out of any of the
following: (a) (i) any breach of or any inaccuracy in any representation or
warranty of the Company pursuant to this Agreement and any Transaction
Agreement, and (ii) any breach of or failure by the Company to perform any
covenant or agreement of the Company contained in this Agreement, subject to the
limitations set forth in SECTION 13.1; (b) (i) the presence, release, spilling,
leaking, emitting, discharging, leaching, dumping or disposal of any Hazardous
Substance existing as of or prior to First Closing by the Company or any
entities formerly owned the Company at, from, in, to, on, or under any property
currently or formerly owned, operated or leased by the Company, or any entities
formerly owned by the Company; (ii) the transportation, treatment, storage,
handling, or disposal or arrangement for transportation, treatment, storage,
handling or disposal of any Hazardous Substance generated prior to the Closing
Date by the Company or any entities formerly owned by the Company at or to any
location occupied by the Company; or (iii) any violation of any Environmental
Law committed prior to the First Closing Date by the Company or any entities
formerly owned by the Company.
13.3 INDEMNIFICATION BY THE PURCHASERS AWK. The Purchasers and AWK shall
indemnify the Company, and, without duplication, each of its Affiliates, and
each of its respective officers, directors, employees and representatives
(collectively, "Company Indemnified Parties") against, and agrees to defend and
hold the Company Indemnified Parties harmless from, any and all Losses incurred
or suffered by any of the Company Indemnified Parties (or any combination
thereof) arising out of any of the following: (a)(i) any breach of or any
inaccuracy in any representation or warranty of AWK pursuant to this Agreement,
and (ii) any breach of or failure by AWK and the Purchasers to perform covenant
or agreement of AWK or the Purchasers contained in this Agreement, subject to
the limitations set forth in SECTION 13.1.
13.4 LOSSES NET OF INSURANCE. The amount of any Loss for which indemnification
is provided under this Article shall be net of any amounts recovered by the
person to be indemnified pursuant to this Article XIII (the "Indemnified Party")
under insurance policies with respect to such Loss.
13.5 TERMINATION OF INDEMNIFICATION. The obligations to indemnify and hold
harmless a party hereto, shall terminate in accordance with SECTION 13.1 and no
claim for indemnification may be made under SECTION 13.2(A) OR 13.3(A) with
respect to any representation, warranty or covenant, after such representation,
warranty or covenant shall have expired in accordance with this SECTION 13.1;
provided, however, that such obligations to indemnify and hold harmless shall
not terminate with respect to any item as to which indemnified party shall have,
before the expiration of the applicable period, previously made a claim by
delivering a notice (stating in reasonable detail the basis of such claim) to
the party from which indemnification is sought pursuant to this Article XIII.
13.6 NOTICE OF CLAIMS; ASSUMPTION OF DEFENSE.
(a) The indemnified party shall give prompt notice ("Claim Notice")
to the indemnifying party, in accordance with the terms of
SECTION 14.2, of the assertion of any claim, or the commencement
of any suit, action or proceeding by any party in respect of
which indemnity may be sought hereunder, specifying with
reasonable particularity (i) the basis therefor, (ii) an estimate
of the amount the indemnified party reasonably anticipates that
it will be entitled to on account of indemnification by the
indemnifying party, and (iii) such other information with respect
thereto as the indemnifying party may reasonably request;
PROVIDED, that no failure to give any such notice shall result in
the loss of any rights to indemnification hereunder except to the
extent that the ability of the indemnifying party to defend a
claim was materially prejudiced by the failure to send such
notice, if the indemnifying party does not object to such claim
within twenty (20) days of receiving notice thereof, the
indemnified party shall be entitled to recover the amount of such
claim pursuant to this ARTICLE XIII. If, however, the
indemnifying party advises the indemnified party that it
disagrees with the indemnified party's claim, the parties shall,
for a period of twenty (20) days after the indemnifying party
advises the indemnified party of such disagreement, attempt to
resolve the difference.
(b) The indemnifying party may, at its own expense, (i) participate
in and, (ii) upon notice to the indemnified party and the
indemnifying party's written agreement that the indemnified party
is entitled to indemnification pursuant to SECTION 13.2 or
SECTION 13.3 for all Losses arising out of such claim, suit,
action or proceeding, at any time during the course of any such
claim, suit, action or proceeding, assume control of the defense
thereof; provided that the indemnifying party shall thereafter
consult with the indemnified party upon the indemnified party's
reasonable request for
such consultation from time to time with respect to such claim,
suit, action or proceeding. If the indemnifying party assumes such
defense, the indemnified party shall have the right (but not the
duty) to participate in the defense thereof and to employ counsel,
at the indemnifying party's expense, separate from the counsel
employed by the indemnifying party. Whether or not the indemnifying
party chooses to defend or prosecute any such claim, suit, action or
proceeding, all of the parties hereto shall cooperate in the defense
or prosecution thereof.
13.7 SETTLEMENT OR COMPROMISE. Whether or not the indemnifying party shall have
assumed the defense of any such claim, suit, action or proceeding of the kind
referred to in SECTION 13.6. the indemnified party shall not admit any liability
with respect to, or settle, compromise or discharge such claim, suit, action or
proceeding without the indemnifying party's prior written consent (which will
not be unreasonably withheld or delayed). The indemnifying party shall obtain
the written consent of the indemnified party (which will not be unreasonably
withheld) before entering into any settlement, adjustment, compromise or
discharge, or ceasing to defend against any such claim, suit, action or
proceeding only if as a result thereof, (a) there would be imposed on the
indemnified party any liability or obligations not covered by the indemnity
obligations of the indemnifying party under this Agreement or (b) there would be
required any admission of wrongful conduct on the part of the indemnified party.
13.8 FAILURE OF INDEMNIFYING PARTY TO ACT. In the event that the indemnifying
party does not elect to assume the defense of any claim, suit, action or
proceeding, then any failure of the indemnified party to defend or to
participate in the defense of any such claim, suit, action or proceeding or to
cause the same to be done, shall not relieve the indemnifying party of its
obligations hereunder, provided, that the indemnified party gives the
indemnifying party at least thirty (30) days written notice of its proposed
failure to defend or participate and affords the indemnifying party the
opportunity to assume the defense thereof.
ARTICLE XIV
MISCELLANEOUS
14.1 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the Transaction Documents
set forth the entire agreement and understanding of the parties hereto and
thereto in respect to the transactions contemplated hereby and thereby and
supersede all prior agreements, arrangements and understandings relating to the
subject matter hereof and are not intended to confer upon any other person any
rights or remedies hereunder. There have been no representations or statements,
oral or written, that have been relied on by any party hereto, except those
expressly set forth in this Agreement. This Agreement may be amended, modified
or supplemented but only in writing signed by all of the parties hereto.
14.2 NOTICES. Any notice, request, instruction or other document to be given
hereunder by a party hereto shall be in writing and shall be deemed to have been
given, (i) when
received if given in person, (ii) on the date of transmission if sent by telex,
telecopy or other wire transmission (provided that a copy of such transmission
is simultaneously sent in the manner provided in CLAUSE (iii) below) or (iii)
five (5) days after being deposited with a reputable courier service:
(a) If to the Company addressed as follows:
000 Xxxxx Xxxx Xxxx.
Xx. Xxxxxxx, Xxxxxxxx 00000
Attn: CEO or President
with a copy to:
00000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx
(b) If to AWK, addressed as follows:
T.B.I. Center Myong Ji University, San 38-2
Nam-Dong, Yongin
Kyunggi-Do KOREA
Telecopier: 00-00-000-0000
Attn: CEO or President
with a copy to:
Davies Xxxx Xxxxxxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attn: Xxxxxx X. Xxxxx, Esq.
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
14.3 AMOUNTS IN UNITED STATES DOLLARS. For purposes of this Agreement, all
figures set out herein which are preceded by the symbol "$" and all references
to "dollars" shall be references to United States Dollars.
14.4 WAIVERS. The failure of a party hereto at any time or times to require
performance of any provision hereof shall in no manner affect its right at a
later time to enforce the same. No waiver by a party of any condition or of any
breach of any term, covenant, representation or warranty contained in this
Agreement shall be effective unless in writing, and no waiver in any one or more
instances shall be deemed to be a further or continuing waiver of any such
condition or breach in other instances or a waiver of any other condition or
breach of any other term, covenant, representation or warranty.
14.5 COUNTERPARTS. This Agreement and any or all of the Transaction Documents
may be executed simultaneously in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
14.6 HEADINGS. The headings preceding the text of Articles and Sections of this
Agreement and the Schedules thereto are for convenience of reference only and
shall not be deemed part of this Agreement.
14.7 APPLICABLE LAW; ARBITRATION.
(a) This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, United States of
America, without regard to its conflict of laws principles.
(b) Any dispute, controversy or claim arising out of or relating to
this Agreement, or the breach, termination or invalidity thereof,
shall be finally
resolved by arbitration in accordance with the Arbitration Rules of
the United Nations Commission on International Trade Law (UNCITRAL)
as at present in force. The arbitration shall take place in New
York, New York and shall be conducted in the English language. The
arbitration shall be conducted by three (3) arbitrators, one to be
appointed by the Company, one to be appointed by AWK and a third by
the two arbitrators so selected. The "appointing authority" for
purposes of the UNCITRAL Rules shall be the American Arbitration
Association.
(c) To the extent permitted by law, the award of the arbitrators may
include, without limitation, one or more of the following: a
monetary award, a declaration of rights, an order of specific
performance, an injunction, reformation of the contract. The
decision of the arbitrators shall be final and binding upon the
parties hereto, and judgment on the award may be entered in any
court of competent jurisdiction.
(d) Each party shall have the right to institute judicial proceedings
for interim measures of protection (including without limitation
injunction, attachment or sequestration of property, temporary
restraining order, preliminary injunctions and other equitable
relief) before or during the pendency of any arbitration
proceeding hereunder, if such remedy is required to prevent
irreparable harm or injury to a party. Each party (without
hereby limiting its susceptibility to suit in any court)
expressly submits itself and consents to the non-exclusive
jurisdiction of the courts of the State of New York, and the
United States federal courts located in the borough of Manhattan,
New York City, New York, with respect to any such judicial
proceeding.
(e) The cash expenses of the arbitration (including without
limitation reasonable fees and expenses of counsel, experts and
consultants) shall be borne by the party against whom the
decision of the arbitrators is rendered; provided that in the
event a party prevails only partially, such party shall be
entitled to get reimbursed for such costs and expenses in the
proportion that the dollar amount successfully claimed by the
prevailing party bears to the aggregate dollar amount claimed.
14.8 ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns; provided,
however, that no assignment or other transfer shall be made without the prior
written approval of each of the parties hereto.
14.9 NO THIRD PARTY BENEFICIARIES. Except as otherwise provided herein, this
Agreement is solely for the benefit of the parties hereto and their respective
Affiliates and no provision of this Agreement shall be deemed to confer upon
third parties any remedy, claim, liability, reimbursement, claim of action or
other right in excess of those existing without reference to this Agreement.
14.10 SEVERABILITY. If any provision of this Agreement is deemed to be invalid,
illegal or unenforceable by an arbitrator, a court of competent jurisdiction or
other governmental authority, the remainder of this Agreement shall remain in
full force and effect or shall be reasonably construed to carry out the intent
of the parties as expressed herein. This Agreement shall be construed according
to its fair meaning, with the language used herein deemed to be the language
chosen by the parties to express their mutual intent, and no presumption or rule
of strict construction shall be applied against any party hereto.
14.11 PREAMBLE AND RECITALS. The Parties acknowledge the accuracy of the
preamble and recitals hereto and such preamble and recitals are hereby
incorporated by reference as if set forth herein at length.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Company and AWK have executed and delivered this
Agreement as of the date first above written.
ANOTHER WORLD, INC. CHEQUEMATE INTERNATIONAL INC.
By: /s/ Philmoon Seong By: /s/ Xxxxxxx Xxxxx
-------------------------- -----------------------
Name: Philmoon Seong Name: Xxxxxxx Xxxxx
Its: CEO/President Its: President and CEO
