STOCK PURCHASE AND SALE AGREEMENT
Dated as of
August 1, 1997
between
ALASKA BINGO SUPPLY, INC.
GLOBAL ALASKA INDUSTRIES, INC.
and
XXXX XXXXXXX
TABLE OF CONTENTS
SECTION 1: GENERAL DEFINITIONS . . . . . . . . . . . . . . . . . . . . -1-
1.1 BEST KNOWLEDGE. . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.2 CODE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.3 ERISA.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.4 EXCHANGE ACT. . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.5 FISCAL YEAR.. . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.6 GOVERNMENTAL AUTHORITY. . . . . . . . . . . . . . . . . . . . . -2-
1.7 GOVERNMENTAL REQUIREMENT. . . . . . . . . . . . . . . . . . . . -2-
1.8 LEGAL REQUIREMENTS. . . . . . . . . . . . . . . . . . . . . . . -2-
1.9 IRS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
1.10 NET WORTH.. . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
1.11 OWNERSHIP INTEREST. . . . . . . . . . . . . . . . . . . . . . . -2-
1.12 PERSON. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
1.13 SECTION.. . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
1.14 SECURITIES ACT. . . . . . . . . . . . . . . . . . . . . . . . . -2-
1.15 TAXES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
SECTION 2: PURCHASE AND SALE OF STOCK. . . . . . . . . . . . . . . . . -3-
2.2 TAXES AND OTHER COSTS.. . . . . . . . . . . . . . . . . . . . . -3-
2.3 GOVERNMENTAL AND REGULATORY APPROVALS.. . . . . . . . . . . . . -3-
2.4 OTHER ASSIGNMENTS.. . . . . . . . . . . . . . . . . . . . . . . -3-
2.5 SG RESIGNATION AND NON-COMPETE. . . . . . . . . . . . . . . . . -3-
SECTION 3. PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . -3-
SECTION 4: CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
4.1 GENERAL PROCEDURE.. . . . . . . . . . . . . . . . . . . . . . . -5-
4.2 TIME AND PLACE. . . . . . . . . . . . . . . . . . . . . . . . . -5-
4.3 EFFECTIVE DATE OF CLOSING.. . . . . . . . . . . . . . . . . . . -5-
4.4 COVENANTS REGARDING CLOSING.. . . . . . . . . . . . . . . . . . -5-
4.5 CONDITIONS TO OBLIGATION OF GAI.. . . . . . . . . . . . . . . . -6-
4.6 CONDITIONS TO OBLIGATION OF ABS AND SHAREHOLDER . . . . . . . . -9-
4.7 SPECIFIC ITEMS TO BE DELIVERED AT THE CLOSING.. . . . . . . . .-10-
4.8 CONDITIONS SUBSEQUENT TO CLOSING. . . . . . . . . . . . . . . .-12-
SECTION 5: REPRESENTATIONS AND WARRANTIES BY ABS AND SHAREHOLDER
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-13-
5.1 ORGANIZATION AND STANDING.. . . . . . . . . . . . . . . . . . .-13-
5.2 SUBSIDIARIES, ETC.. . . . . . . . . . . . . . . . . . . . . . .-13-
5.3 QUALIFICATION . . . . . . . . . . . . . . . . . . . . . . . . .-13-
5.4 CORPORATE AUTHORITY.. . . . . . . . . . . . . . . . . . . . . .-13-
5.5 FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . .-14-
5.6 CAPITALIZATION OF THE CORPORATION.. . . . . . . . . . . . . . .-14-
5.7 NO DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . .-14-
5.8 TAXES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .-15-
5.9 NO ACTIONS, PROCEEDINGS, ETC. . . . . . . . . . . . . . . . . .-15-
5.10 POST BALANCE SHEET CHANGES. . . . . . . . . . . . . . . . . . .-15-
5.11 NO BREACHES.. . . . . . . . . . . . . . . . . . . . . . . . . .-15-
5.12 CONDITION OF THE CORPORATION'S ASSETS.. . . . . . . . . . . . .-16-
5.13 INVENTORY.. . . . . . . . . . . . . . . . . . . . . . . . . . .-16-
5.14 ACCOUNTS RECEIVABLE.. . . . . . . . . . . . . . . . . . . . . .-16-
5.15 CORPORATE ACTS AND PROCEEDINGS. . . . . . . . . . . . . . . . .-16-
5.16 REGISTERED RIGHTS AND PROPRIETARY INFORMATION.. . . . . . . . .-16-
5.17 CHANGES IN SUPPLIERS AND CUSTOMERS. . . . . . . . . . . . . . .-18-
5.18 NO LIENS OR ENCUMBRANCES. . . . . . . . . . . . . . . . . . . .-18-
5.19 EMPLOYEE MATTERS. . . . . . . . . . . . . . . . . . . . . . . .-18-
5.20 LEGAL PROCEEDINGS AND COMPLIANCE WITH LAW.. . . . . . . . . . .-18-
5.21 CONTRACT SCHEDULES. . . . . . . . . . . . . . . . . . . . . . .-19-
5.22 LABOR MATTERS.. . . . . . . . . . . . . . . . . . . . . . . . .-20-
5.23 INSURANCE.. . . . . . . . . . . . . . . . . . . . . . . . . . .-20-
5.24 ENVIRONMENTAL.. . . . . . . . . . . . . . . . . . . . . . . . .-20-
5.25 DISCLOSURE OF INFORMATION.. . . . . . . . . . . . . . . . . . .-21-
SECTION 6: COVENANTS OF ABS AND SHAREHOLDER. . . . . . . . . . . . . .-21-
6.1 PRESERVATION OF BUSINESS. . . . . . . . . . . . . . . . . . . .-21-
6.2 ORDINARY COURSE.. . . . . . . . . . . . . . . . . . . . . . . .-22-
6.3 NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . .-22-
6.4 ACCESS TO BOOKS AND RECORDS, PREMISES, ETC. . . . . . . . . . .-22-
6.5 COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . .-22-
6.6 NO SOLICITATION . . . . . . . . . . . . . . . . . . . . . . . .-23-
SECTION 7: REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER . . . . . . .-23-
7.1 SHARE OWNERSHIP.. . . . . . . . . . . . . . . . . . . . . . . .-23-
7.2 RIGHTS OWNERSHIP. . . . . . . . . . . . . . . . . . . . . . . .-24-
7.3 RESTRICTION ON FUTURE TRANSFER. . . . . . . . . . . . . . . . .-24-
SECTION 8: REPRESENTATIONS AND WARRANTIES OF GAI . . . . . . . . . . .-24-
8.1 ORGANIZATION AND STANDING.. . . . . . . . . . . . . . . . . . .-24-
8.2 CORPORATE ACTS AND PROCEEDINGS. . . . . . . . . . . . . . . . .-24-
SECTION 9: TERMINATION . . . . . . . . . . . . . . . . . . . . . . . .-24-
9.2 EFFECT OF TERMINATION.. . . . . . . . . . . . . . . . . . . . .-25-
SECTION 10: INDEMNIFICATION AND REMEDIES FOR BREACH . . . . . . . . . .-25-
10.1 INDEMNIFICATION BY GAI. . . . . . . . . . . . . . . . . . . . .-25-
10.2 INDEMNIFICATION BY ABS, SHAREHOLDER AND SG. . . . . . . . . . .-25-
10.3 ADDITIONAL NOTICE.. . . . . . . . . . . . . . . . . . . . . . .-26-
10.4 DETERMINATION OF DAMAGES AND RELATED MATTERS. . . . . . . . . .-26-
10.5 REMEDIES FOR BREACH.. . . . . . . . . . . . . . . . . . . . . .-27-
SECTION 11: NONDISCLOSURE OF CONFIDENTIAL INFORMATION . . . . . . . . .-27-
SECTION 12: EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . .-28-
SECTION 13: MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . .-28-
13.1 ATTORNEY'S FEES.. . . . . . . . . . . . . . . . . . . . . . . .-28-
13.2 SURVIVAL AND INCORPORATION OF REPRESENTATIONS.. . . . . . . . .-29-
13.3 INCORPORATION BY REFERENCE. . . . . . . . . . . . . . . . . . .-29-
13.4 PARTIES IN INTEREST.. . . . . . . . . . . . . . . . . . . . . .-29-
13.5 AMENDMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . . . .-29-
13.6 WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . .-29-
13.7 GOVERNING LAW - CONSTRUCTION. . . . . . . . . . . . . . . . . .-29-
13.8 LIMITATION OF ACTIONS.. . . . . . . . . . . . . . . . . . . . .-29-
13.9 NOTICES.. . . . . . . . . . . . . . . . . . . . . . . . . . . .-30-
13.10 FAX/COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . .-30-
13.11 CAPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .-31-
13.12 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . .-31-
13.13 JURISDICTION AND VENUE. . . . . . . . . . . . . . . . . . . . .-31-
13.14 GOOD FAITH COOPERATION AND ADDITIONAL DOCUMENTS.. . . . . . . .-31-
13.15 LEGAL COUNSEL.. . . . . . . . . . . . . . . . . . . . . . . . .-31-
13.16 SPECIFIC PERFORMANCE. . . . . . . . . . . . . . . . . . . . . .-31-
13.17 ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . .-31-
13.18 LIST OF EXHIBITS. . . . . . . . . . . . . . . . . . . . . . . .-31-
13.19 ENTIRE AGREEMENT - AMENDMENT. . . . . . . . . . . . . . . . . .-32-
13.20 AUTHORITY TO SIGN.. . . . . . . . . . . . . . . . . . . . . . .-33-
13.21 EXECUTION OF DOCUMENTS. . . . . . . . . . . . . . . . . . . . .-33-
13.22 TIME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-33-
EXHIBITS
Exhibit 3.2(b ) Convertible Promissory Note
Exhibit 3.2(d)(1) Stock Pledge Agreement
Exhibit 3.2(d)(2) General Security Agreement
Exhibit 4.5(o) Non-Competition Agreements
Exhibit 4.5(v) Opinion of counsel for ABS, Xxxxxx X. Xxxxxxxx
Exhibit 4.7(b)(vi) Certificate of ABS certified independent accountant
Exhibit 5.2 ABS Ownership Interest in any corporation, partnership,
joint venture, association or other business
enterprise.
Exhibit 5.3 ABS Qualification to engage in business as a foreign
corporation in any state other than Alaska
Exhibit 5.4 Corporate Authority
Exhibit 5.5 Financial Statements
Exhibit 5.6 ABS record owner of its issued and outstanding Common
Stock
Exhibit 5.7 ABS Disclosure Schedule (Material Defaults)
Exhibit 5.8 ABS Exceptions to Timely Filing of Taxes; Tax Related
Disputes
Exhibit 5.9 ABS Pending or Threatened Actions or Proceedings
Exhibit 5.10 ABS Third Party Proprietary Interest in Intangible Shares
Exhibit 5.12 ABS Exceptions to Inventory Valuation, Condition and
Marketability
Exhibit 5.13 ABS unusable or unsalable inventories
Exhibit 5.14 ABS material counterclaim or set-off with respect to
accounts receivable
Exhibit 5.16 ABS Registered Rights
Exhibit 5.17 ABS Customer relations
Exhibit 5.18 ABS leased property and assets
Exhibit 5.19 ABS Employees and employee remuneration
Exhibit 5.20 ABS Pending or Threatened Legal, Administrative, or Other
Proceedings or Governmental Investigation, Exceptions
to Compliance with Laws, Ordinances, Requirements,
Regulations, or Orders
Exhibits 5.21(a)
to 5.21(e) ABS Contract Schedules
Exhibit 5.21(f) ABS Contract Defaults
Exhibit 5.24 ABS Environmental Concerns: Hazardous Waste Production,
Storage, etc.
STOCK PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made and entered into effective this _______ day of
July, 1997, between and among GLOBAL ALASKA INDUSTRIES, INC., an Alaska
corporation (the "Company" or "GAI"); ALASKA BINGO SUPPLY, INC., an Alaska
corporation ("ABS"); and XXXX XXXXXXX, individually and in his capacity as the
sole shareholder of ABS ("MG" or "Shareholder").
WITNESSETH
WHEREAS, Shareholder is the record and beneficial owner of shares
constituting 100% of the issued and outstanding shares of common stock of ABS
(the "Shares"); and
WHEREAS, GAI desires to acquire all the issued and outstanding shares of
common stock of ABS owned by Shareholder, as well as any and all other equity
rights, options, warrants and the like ("Rights") owned by Shareholder subject
to the terms and conditions set forth in this Agreement; and
WHEREAS, Shareholder desires to sell all of his shares of common stock
and other rights in ABS, subject to the terms and conditions hereinafter set
forth; and
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, and other good and
valuable consideration, the receipt and adequacy whereof is hereby
acknowledged, the parties agree as follows:
SECTION 1: GENERAL DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings set forth below:
1.1 BEST KNOWLEDGE. "Best Knowledge" shall mean both what a Person
knew as well as what the Person should have known had the Person exercised
reasonable diligence. When used with respect to a Person other than a natural
person, the term "Best Knowledge" shall include matters that are known to the
current directors, officers, partners, trustees, administrators, executors,
managers, employees, consultants and agents of the Person, as well as past
directors, officers, partners, managers and employees of the Person.
1.2 CODE. "Code" means the Internal Revenue Code of 1986, as amended.
1.3 ERISA. "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
1.4 EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
1.5 FISCAL YEAR. "Fiscal Year" shall mean a twelve-month period
beginning July 1;
1.6 GOVERNMENTAL AUTHORITY. "Governmental Authority" shall mean any
and all foreign, federal, state or local governments, governmental
institutions, public authorities and governmental entities of any nature
whatsoever, and any subdivisions or instrumentalities thereof, including, but
not limited to, departments, boards, bureaus, commissions, agencies, courts,
administrations and panels, and any division or instrumentalities thereof,
whether permanent or ad hoc and whether now or hereafter constituted or
existing.
1.7 GOVERNMENTAL REQUIREMENT. "Governmental Requirement" shall mean
any and all laws (including, but not limited to, applicable common law
principles), statutes, ordinances, codes, rules, regulations, interpretations,
guidelines, directions, orders, judgments, writs, injunctions, decrees,
decisions or similar items or pronouncements, promulgated, issued, passed or
set forth by any Governmental Authority.
1.8 LEGAL REQUIREMENTS. "Legal Requirements" means applicable common
law and any statute, ordinance, code or other laws, rule, regulation, order,
technical or other standard, requirement, judgment, or procedure enacted,
adopted, promulgated, applied or followed by any governmental authority,
including, without limitation, any order, decree, award, verdict, findings of
fact, conclusions of law, decision or judgment, whether or not final or
appealable, of any court, arbitrator, arbitration board or administrative
agency.
1.9 IRS. "IRS" means the Internal Revenue Service.
1.10 NET WORTH. "Net Worth" shall mean the Shares of a Person minus
the liabilities of the Person, as of a given date as determined in accordance
with generally accepted accounting principles.
1.11 OWNERSHIP INTEREST. "Ownership Interest" shall mean any form of
direct or indirect interest in the ownership, equity or profits of GAI or
Shareholder, whether certificated or non-certificated, issued or unissued,
contingent or otherwise, including, without limitation, the following:
Shares, or the right thereto, executory rights to receive Shares, options,
warrants, instruments or obligations convertible into Shares or profit
interests.
1.12 PERSON. "Person" shall mean any natural person, any Governmental
Authority and any entity the separate existence of which is recognized by any
Governmental Authority or Governmental Requirement, including, but not limited
to, corporations, partnerships, joint ventures, joint stock companies, trusts,
estates, companies and associations, whether organized for profit or
otherwise.
1.13 SECTION. Unless otherwise stated herein, the term "Section" when
used in this Agreement shall refer to the Sections of this Agreement.
1.14 SECURITIES ACT. "Securities Act" shall mean the Securities Act of
1933, as amended.
1.15 TAXES. "Tax" and "Taxes" shall mean any and all income, excise,
franchise or other taxes and all other charges or fees imposed or collected by
any Governmental Authority or pursuant to any Governmental Requirement, and
shall also include any and all penalties, interest, deficiencies, assessments
and other charges with respect thereto.
SECTION 2: PURCHASE AND SALE OF STOCK
On the terms and subject to the conditions of this Agreement, and
in reliance upon the representations and warranties of the parties contained
in this Agreement:
2.1 PURCHASE AND SALE OF STOCK. Subject to the terms and conditions
hereinafter set forth, on the Closing Date, Shareholder shall tender and
deliver to GAI in such form to be acceptable for transfer, against tender and
delivery of the Purchase Price as defined herein, certificates representing
100% of the outstanding shares of capital stock and Rights of ABS.
2.2 TAXES AND OTHER COSTS. All transfer and conveyance taxes related
to the sale of the Shares shall be payable by Shareholder at Closing, except
to the extent incurred solely by GAI.
2.3 GOVERNMENTAL AND REGULATORY APPROVALS. Prior to the Closing Date,
Shareholder shall have obtained the consent and approval of all governmental
and regulatory authorities necessary to transfer the shares to GAI.
2.4 OTHER ASSIGNMENTS. On the Closing Date, Shareholder shall
transfer and assign to GAI, or to such party designated by GAI, any and all
other contract rights, agreements, leases, licenses and other tangible and
intangible assets utilized by Shareholder and ABS in and necessary for the
conduct of its business in accordance with past practices. Shareholder and
ABS agree to execute and deliver such assignments as GAI may reasonably
request in order to effect the purposes and intent of the foregoing provision.
2.6 LABOR MATTERS. Prior to Closing, Shareholder and GAI shall
mutually agree upon the terms and conditions of the continuing employment of
key employees of ABS following the Closing Date. In addition, GAI shall agree
to continue the retention of mutually acceptable existent lobbyist engaged by
ABS for the charitable gaming industry for at least three year following the
Closing Date.
SECTION 3. PURCHASE PRICE.
3.1 The Purchase Price for the Shares, the covenant not to compete and
the other assignments and covenants herein described shall consist of a fixed
amount (the "Fixed Amount") and a contingent amount (the "Contingent Amount").
3.2 The Fixed Amount of the Purchase Price shall be the sum of Four
Million Four Hundred Dollars ($4,400,000), payable as follows:
(a) The sum of Four Hundred Thousand Dollars ($400,000) shall
be payable in cash, certified funds or wire transfer of
immediately available funds at the time of Closing. Such funds
shall be nonrefundable unless it is determined that the audited
financial statements of ABS more fully described in Section 4.5(q)
hereof cannot be prepared due to an inability of ABS to satisfy
all applicable auditing standards, policies and procedures, and
GAI elects to rescind the purchase and sale of the common stock
provided for herein;
(b) The balance of the Fixed Amount of the Purchase Price of
Four Million Dollars ($4,000,000) shall be evidenced by GAI's
convertible promissory note (the "Promissory Note") payable to the
order of Shareholder ("Holder"), which shall be repayable,
together with interest at the rate of eight percent (8%) per
annum, in monthly installments amortized over a term of seven (7)
years. The first payment of $25,000 shall be due on October 15,
1997, with regular monthly installments of principal and interest
to begin November 15, 1997 and continuing thereafter until the
Promissory Note is paid in full. Interest shall be computed from
the date of Closing and interest accrued for the period between
the Closing Date and the first installment payment shall be
amortized over the term of the Promissory Note. In addition to
the regular monthly installments, GAI shall be obligated to prepay
the principal balance of the Promissory Note to the extent of and
in an amount equal to fifty percent (50%) of GAI's annual earnings
before interest, taxes, depreciation and amortization ("EBITDA")
in excess of $1,300,000 per year (the "Mandatory Prepayment"). In
addition, GAI shall have the right, but not the obligation to
prepay all or any portion of the principal balance and any accrued
and unpaid interest in excess of the Mandatory Prepayment amount
at any time without penalty. The Promissory Note shall be
substantially in the form of Exhibit 3.2(b) hereto.
(c) The Promissory Note shall grant the Holders thereof the
right to convert up to $2,500,000 of outstanding principal
balance due on the Promissory Note into shares of common stock of
GLOBAL CASINOS, INC., a Utah corporation, at a conversion price of
$10.00 per share, subject to adjustment under certain
circumstances. Such conversion option may be exercised by the
Holders at any time commencing one year after the date of the
Promissory Note and ending the date next preceding the maturity
date of the Promissory Note or the date of its prepayment,
whichever is first to occur. In the event that GAI intends to
prepay the Promissory Note prior to the maturity date, GAI shall
give the Holders thirty (30) days' prior written notice of such
prepayment; whereupon the Holders shall have the option to
exercise the conversion right granted herein until the date next
preceding the date of such prepayment. In the event Holders
exercise the right of conversion granted in the Promissory Note,
they shall be granted a one-time demand registration right on
Form S-3 to have registered for resale under the Securities Act
the shares of common stock ("Conversion Stock") issuable upon such
conversion.
(d) The Promissory Note shall be non-recourse as to GAI and shall be
secured by a Stock Pledge Agreement covering the Shares by GAI in favor of
Shareholder by GAI in favor of Shareholder and by General Security Agreement
and Financing Statement covering all of the tangible and intangible assets of
ABS (the "Collateral"), substantially in the form of Exhibits 3.2(d)(1) and
(2), respectively. In the event of a default by GAI under the Promissory
Note, the sole recourse of Holders shall be against the Shares and Collateral
without any corporate liability for any deficiency assessable against GAI.
3.3 In addition to the Fixed Amount, GAI shall pay to the Holders a
Contingent Amount equal to fifty percent (50%) of GAI's EBITDA in excess of
$1,025,000 per year during the term of the Promissory Note; provided, however,
that the Contingent Amount shall in no event exceed the sum of $100,000 per
year. The obligation of GAI to pay the Contingent Amount shall terminate upon
payment in full and retirement of the Promissory Note. Payment of the
Contingent Amount, if any, will be made no later than 105 days after the end
of GAI's fiscal year which is expected to be June 30.
SECTION 4: CLOSING
4.1 GENERAL PROCEDURE. At the Closing each party shall deliver such
documents, instruments and materials as may be reasonably required in order to
effectuate the intent and provisions of this Agreement, and all such
documents, instruments and materials shall be satisfactory in form and
substance to counsel for the other parties.
4.2 TIME AND PLACE. The Closing shall take place in the offices of
XXXXXX X. XXXXXXXX, 000 Xxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxx,
00000, as soon as practicable but in no event later than (i) July 31, 1997 or
(ii) five (5) business days from the date of the satisfaction or waiver of all
conditions precedent set forth in Sections 4.5 and 4.6, whichever occurs first
(the "Closing Date").
4.3 EFFECTIVE DATE OF CLOSING. Notwithstanding the actual time and
place of Closing, the parties stipulate and agree that the effective date of
Closing and the effective date of the sale and purchase of the Shares shall be
August 1, 1997.
4.4 COVENANTS REGARDING CLOSING. The parties hereby covenant and
agree that they shall (i) use reasonable efforts to cause each of their
respective Exhibits to be prepared and exchanged with the other party, and its
legal counsel, within ten (10) business days following the execution of this
Agreement, except to the extent the express terms of this Agreement provide
for a different time period for such delivery to be accomplished, (ii) use
reasonable efforts to cause all of their respective representations and
warranties set forth in this Agreement, and Exhibits hereto, to be true on and
as of the Closing Date, (iii) use reasonable efforts to cause all of their
respective obligations that are to be filled on or prior to the Closing Date
to be so fulfilled, (iv) use reasonable efforts to cause all conditions to the
Closing set forth in this Agreement to be satisfied on or prior to the Closing
Date, and (v) use reasonable efforts to deliver to each other at the Closing
the certificates, updated lists, notices, consents, authorizations, approvals,
agreements, transfer documents, receipts and amendments contemplated hereby
(with such additions or exceptions to such items as are necessary to make the
statements set forth in such items accurate and acceptable, provided that if
any such additions or exceptions cause any of the conditions to the parties'
obligations hereunder as set forth hereinbelow not to be fulfilled, such
additions and exceptions shall in no way limit the rights of the parties
hereunder to terminate this Agreement or refuse to consummate the transactions
contemplated hereby).
4.5 CONDITIONS TO OBLIGATION OF GAI. The obligation of GAI to
complete the purchase of the Shares on the Closing date on the terms set forth
in this Agreement is, at the option of GAI, subject to the satisfaction or
waiver by GAI of each of the following conditions:
(a) Accuracy of Representations And Warranties. The
representations and warranties made by Shareholder in this Agreement
shall be correct in all material respects on and as of the Closing date
with the same force and effect as though such representations and
warranties had been made on the Closing date.
(b) Compliance with Covenants. All covenants which
Shareholder is required to perform or comply with on or before the
Closing date shall have been fully complied with or performed in all
material respects.
(c) Corporate Approvals. The Shareholder shall have approved
and ratified this Agreement and shall have authorized the appropriate
officers of ABS to execute same and fully perform its terms.
(d) Consents and Approvals. To the extent that any material
lease, mortgage, deed of trust, contract or agreement to which ABS or
Shareholder is a party shall require the consent of any person to the
purchase and sale of the Shares or any other transaction provided for
herein, such consent shall have been obtained; provided, however, that
the ABS and Shareholder shall not make, as a condition for the obtaining
of any such consent, any agreements or undertakings not approved in
writing by GAI to the extent that such condition otherwise has an effect
on GAI.
(e) Review and Due Diligence. GAI, its investment bankers,
legal counsel and/or auditors shall have had the opportunity to complete,
and shall have completed, a satisfactory due diligence investigation of
the ABS, together with a satisfactory review of the marketability of
title to the ABS's property.
(f) No Governmental Actions. No action or proceeding before
any governmental authority shall have been instituted or threatened to
restrain or prohibit the transactions contemplated by this Agreement, and
the parties shall have delivered to each other certificates dated as of
the Closing Date and executed by such parties, stating that to their Best
Knowledge, no such items exist. No governmental authority shall have
taken any other action as a result of which the management of any of the
parties, in their sole discretion, reasonably deems it inadvisable to
proceed with the transactions contemplated by this Agreement.
(g) No Litigation, Etc. No action, investigation, litigation
or arbitration or proceeding by or before any Governmental Authority, or
before any arbitral, mediation panel or tribunal of any kind shall have
been instituted or threatened (i) to restrain or prohibit the
transactions contemplated by this Agreement, or (ii) to claim that the
consummation of any such transaction is illegal or (iii) which, if
determined adversely, would effect adversely GAI or ABS or Shareholder
following consummation of the transactions contemplated hereby and ABS
and Shareholder shall have delivered to GAI a certificate dated as of the
Closing Date and executed by ABS and Shareholder, stating that to its
Best Knowledge, no such items exist. No governmental authority or
arbitral, mediation panel or tribunal of any kind shall have taken any
other action as a result of which the management of GAI, in its sole
discretion, reasonably deems it inadvisable to proceed with the
transactions contemplated by this Agreement.
(h) No Material Adverse Change. No material adverse change in
the property of ABS shall have occurred, and no loss or damage to any of
ABS assets or operations, whether or not covered by insurance, has
occurred, and the Shareholder and ABS shall have delivered to GAI a
certificate dated as of the Closing Date and executed by ABS and
Shareholder to all such effects.
(i) Update of Contracts. ABS shall have delivered to GAI an
accurate list, as of the Closing Date, showing (i) all agreements,
contracts and commitments of the type listed on Exhibit 5.21 entered into
since the date of this Agreement; and (ii) all other agreements,
contracts and commitments related to the businesses or the assets of ABS
entered into since the date of this Agreement, together with true,
complete and accurate copies of all such documents (the "ABS New
Contracts"). GAI shall have had the opportunity to review and approve
the ABS New Contracts of the other, and any of the Companies shall have
the right to delay the Closing for up to ten (10) days if it in its sole
discretion deems such delay necessary to enable it to adequately review
the ABS New Contracts.
(j) Approval of Counsel. All actions, proceedings,
instruments and documents required or incidental to carry out this
Agreement, including all schedules and exhibits thereto, and all other
related legal matters shall have been approved by XXXXXX & XXXXXXX, LLC,
counsel to GAI, and XXXXXX X. XXXXXXXX, counsel to ABS.
(k) No Adverse Information. The investigations with respect
to ABS or its Assets performed by GAI's professional advisors and other
representatives shall not have revealed any information concerning ABS or
its Assets that has not been made known to GAI, in writing prior to the
date of this Agreement and that, in the opinion of such party and its
advisors, materially and adversely affects the assets of the other party
or the viability of the transaction contemplated by this Agreement.
(l) Ordinary Course of Business. During the period from the
date of this Agreement until the Closing Date, ABS shall have carried on
its business in the ordinary and usual course, and shall have delivered
to GAI a certificate to that effect.
(m) Liens. ABS shall have delivered to GAI a reasonably
current lien and judgment search (both state and county levels in each
jurisdiction where the party is qualified to or is doing business or owns
material assets) confirming the absence of any judicial liens, tax liens
and similar such liens affecting any of its business or assets. Each and
every lien or encumbrance of any nature, if any, relating to ABS, except
for those liens set forth on Exhibit 4.5(m) hereto, shall have been
terminated and released, and proof thereof delivered to the GAI.
(n) Other Documents. ABS, Shareholder shall have delivered or
caused to be delivered all documents, agreements, resolutions,
certificates or declarations as GAI or its attorneys may have reasonably
requested.
(o) Non-Competition Agreements. At Closing, Shareholder shall
execute and deliver to GAI their respective Non-Competition Agreements
substantially in the form of Exhibits 4.5(o) and 2.5, respectively
hereto.
(p) Resignation.
(q) Audited Financial Statements. At Closing, ABS shall
deliver to GAI the written certification of its independent accountant
confirming that all necessary information, documentation, observation,
confirmation and the like are available to permit the preparation of
audited financial statements and report of independent certified public
accountants of ABS containing an audited balance sheet of ABS for a
minimum of one (1) fiscal year, or until inception, whichever is shorter,
together with statements of operations, cash flows and stockholders'
equity for ABS for a minimum of two (2) fiscal years, or to date of
inception, whichever is shorter, which financial statements and report of
auditors shall be in such form as to fully comply with all requirements
of Regulation SB under the Securities Act and any other applicable
securities laws; and Shareholder and ABS shall provide their joint and
several undertaking to cooperate with GAI to complete such audited
financial statements, the cost and expense of which will be shared
equally by Shareholder and GAI, not later than sixty (60) days following
the Closing Date, which audited financial statements and report of
auditors shall in all respects conform with the requirements of
Regulation SB and be satisfactory to GAI and its legal counsel.
(r) Regulatory Approvals. GAI shall have received the
approval of all required regulatory authority to the conduct of business
substantially in the same manner as conducted by ABS and MG.
(s) ABS Financial Condition and Results of Operations. ABS
shall demonstrate 1996 recast EBIT of not less than $950,000. Further,
the net current assets of ABS shall be not less than $400,000 as of the
Closing Date. For purposes of this Agreement, net current assets shall
mean the sum of cash, accounts receivable, inventory, prepaid expenses
and other current assets less accounts payable, the ABS line of credit,
the current portion of long-term obligation and other current
liabilities. Any net current assets of ABS in excess of $400,000 shall
be payable to Shareholder in four (4) equal monthly installments
commencing September 30, 1997 and thereafter on or before the last day of
each month until December 31, 1997.
(t) Liabilities to Shareholder. Prior to Closing, Shareholder
shall have contributed to the capital of ABS the entire outstanding
balance of principal together with accrued and unpaid interest, which may
have been due and owing by ABS to Shareholder as a result of any fact,
transaction or occurrence prior to the Closing Date, and ABS shall have
been released and forever discharged from any past, current or future to
Shareholder or SG of whatsoever kind or description.
(u) Financial Advisory Fees. At or prior to Closing, all
obligations or commitments of ABS to its financial advisors and
investment bankers shall have been paid or otherwise satisfied, and GAI
shall have delivered and received such written consents, approvals,
estoppel certificates or other instruments or undertakings from ABS as it
may deem reasonable, necessary or advisable.
(v) Opinion of Counsel. GAI shall have received an opinion of
XXXXXX X. XXXXXXXX, counsel for ABS, dated as of the Closing Date,
substantially in the form of Exhibit 4.5(v) hereto.
4.6 CONDITIONS TO OBLIGATION OF ABS AND SHAREHOLDER. The obligations
of ABS and Shareholder to complete the transactions described herein on the
Closing Date on the terms set forth in this Agreement is, at the option of ABS
and Shareholder subject to the satisfaction or waiver by ABS and Shareholder
of each of the following conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties made by GAI in this Agreement shall be
correct in all material respects on and as of the Closing date with the
same force and effect as though such representations and warranties had
been made on the Closing date.
(b) Compliance with Covenants. All covenants which GAI is
required to perform or comply with on or before the Closing date shall
have been fully complied with or performed in all material respects.
(c) Corporate Approvals. GAI shall have approved and ratified
this Agreement and shall have authorized the appropriate parties to
execute same and fully perform its terms.
(d) Consents and Approvals. To the extent that any material
lease, mortgage, deed of trust, contract or agreement to which such party
or any statute, rule or regulation shall require the consent of any
person to the transactions provided for herein, such consent shall have
been obtained; provided, however, that such party shall not make, as a
condition for the obtaining of any such consent, any agreements or
undertakings not approved in writing by GAI to the extent that such
condition otherwise has an effect on GAI.
(e) Approval of Counsel. All actions, proceedings,
instruments and documents required or incidental to carry out this
Agreement, including all schedules and exhibits thereto, and all other
related legal matters shall have been approved as to substance and form
by XXXXXX X. XXXXXXXX, counsel to Seller.
(f) Delivery of Documents. GAI shall have delivered or caused
to be delivered all documents agreements, resolutions, certificates or
declarations as ABS and Shareholder, or their attorneys, may have
reasonably requested.
4.7 SPECIFIC ITEMS TO BE DELIVERED AT THE CLOSING. The parties shall
deliver the following items to the appropriate party at the Closing of the
transactions contemplated by this Agreement.
(a) To be delivered by GAI:
(i) Cash or certified funds payable to Shareholder in the
amount of $400,000;
(ii) Promissory Note substantially in the form of Exhibit
3.2(b) hereto;
(iii) Stock Pledge Agreement substantially in the form of
Exhibit 3.2(d)(1) hereto;
(iv) General Security Agreement substantially in the form
of Exhibit 3.2(d)(2) hereof;
(v) Copy of corporate resolution authorizing the
execution of this Agreement and the consummation by
GAI of the transactions contemplated by this
Agreement;
(vi) A certificate of the President of GAI stating that
the representations and warranties of GAI set forth
in this Agreement are true and correct. Said
certificate shall further verify and affirm that all
consents or waivers, if any, which may be necessary
to execute and deliver this Agreement have been
obtained and are in full force and effect;
(vii) A certificate dated the Closing Date, signed by the
Chief Executive Officer and the Chief Financial
Officer of GAI, in form and substance satisfactory to
the other party and its legal counsel, certifying
that all conditions precedent set forth in this
Agreement to the obligations of GAI to close, have
been fulfilled, and that no event of default
hereunder and no event which, with the giving of
notice or passage of time, or both, would be an event
of default, has occurred as of such date.
(viii) Certificates dated the Closing Date, signed by the
Secretary of GAI, (i) certifying resolutions duly
adopted by the Board of Directors of GAI, authorizing
the execution of this Agreement and all of the other
transactions to be consummated pursuant thereto; (ii)
certifying the names and incumbency of the officers
of GAI who are empowered to execute the foregoing
documents for and on behalf of such company; (iii)
certifying the authenticity of copies of the Articles
of Incorporation and Bylaws of GAI; and (iv)
certifying the authenticity of a reasonably current
Certificate of Good Standing, from all relevant
jurisdictions in which the Company is qualified to
conduct business.
(b) To be delivered by ABS:
(i) Copy of corporate resolutions authorizing the
execution of this Agreement, and the consummation by
ABS of the transactions contemplated by this
Agreement.
(ii) A certificate of the President of ABS stating that
the representations and warranties of ABS set forth
in this Agreement are true and correct. Said
certificate shall further verify and affirm that all
consents or waivers, if any, which may be necessary
to execute and deliver this Agreement have been
obtained and are in full force and effect.
(iii) A certificate dated the Closing Date, in form and
substance satisfactory to the other party and its
legal counsel, certifying that all conditions
precedent set forth in this Agreement to the
obligations of ABS to close, have been fulfilled, and
that no event of default hereunder and no event
which, with the giving of notice or passage of time,
or both, would be an event of default, has occurred
as of such date.
(iv) Certificates dated the Closing Date, signed by the
Secretary of ABS, (i) certifying resolutions duly
adopted by the Board of Directors and Shareholders of
ABS, authorizing the execution of this Agreement and
all of the other transactions to be consummated
pursuant thereto; (ii) certifying the names and
incumbency of the officers of ABS who are empowered
to execute the foregoing documents for and on behalf
of such company; (iii) certifying the authenticity of
copies of the Articles of Incorporation and Bylaws of
ABS; and (iv) certifying the authenticity of a
reasonably current Certificate of Good Standing, from
all jurisdictions in which the company is qualified
to conduct business.
(v) Resignations of all ABS officers and directors, to be
effective as of the Closing Date.
(vi) Certificate of the certified independent accountant
of ABS substantially in the form of
Exhibit 4.7(b)(vi), hereto.
(vii) Undertaking of ABS with respect to the preparation,
completion and delivery of audited financial
statements more fully described in Section 4.5(q)
hereof and substantially in the form of
Exhibit 4.7(b)(vii), hereto.
(viii) Opinion of XXXXXX X. XXXXXXXX, counsel to ABS,
substantially in the form of Exhibit 4.5(v).
(c) To be delivered by Shareholder:
(i) Certificate or certificates representing 100% of the
issued and outstanding common shares of ABS, which
stock certificates shall be endorsed in favor of GAI.
(ii) Assignments, if any, with unconditional warranties of
title, duly executed by Shareholder, assigning to GAI
any and all equity rights, including, but not limited
to, options, warrants, puts and so forth, which
Shareholder may own in ABS at the time of Closing.
(iii) Certificate of Shareholder in which he states that he
owns the Shares and other Rights of ABS free and
clear of all liens, encumbrances, security interests
and limitations on transfer whatsoever.
(iv) Certificate of Shareholder confirming the accuracy,
as of the Closing date, of the representations and
warranties of Shareholder set forth in this
Agreement.
(v) Non-Competition Agreement substantially in the form
of Exhibit 4.5(o).
4.8 CONDITIONS SUBSEQUENT TO CLOSING. Following Closing, GAI shall
retain an independent certified public accountant to undertaken an audit of
the financial statements of ABS as of and for the two-year period ending
June 30, 1997 (the "ABS Audit"). The ABS Audit shall comply in form and
substance with all requirements of Regulation SB under the Securities Act and
such ABS Audit, together with the report of auditors, shall in all respects
conform with the requirements of Regulation SB and be satisfactory to GAI and
its legal counsel. The ABS Audit shall be completed not later than sixty (60)
days following the Closing Date, and Shareholder agrees to cooperate in all
material respects with GAI and its auditor in the preparation of such ABS
Audit. All costs and expenses incurred in connection with the preparation of
the ABS Audit shall be shared equally by GAI and Shareholder. In the event
that it is determined the the ABS Audit cannot be completed within sixty (60)
days following the Closing Date or, if it is determined that the ABS Audit can
be completed in a timely fashion but cannot be completed in conformity with
the requirements of Regulation SB under the Securities Act, then GAI shall
have the right and option for a period of commencing 61 days following the
Closing Date and ending 120 days following the Closing Date to elect to
rescind the transaction provided for in this Agreement. In the event GAI
elects to rescind the sale and purchase of the Shares, each party shall return
to the other each of the deliverables identified in Section 10 of this
Agreement within thirty (30) days of GAI's election to so rescind. In such
event, all certificates, assignments, and ancillary agreements executed and
delivered by the parties in connection with the Closing shall be deemed null
and void, all outstanding shares of ABS common stock, and all certificates
representing same, shall be returned to Shareholder and all payments made by
GAI to Shareholder under this Agreement or under the Promissory Note shall be
refunded in full, without interest or deduction. Further, in the event of
such rescission all operations of ABS commencing on the Closing Date and
ending on the date of rescission shall inure to the benefit of Shareholder,
including all net profit earned during the period. Upon such rescission, each
party shall be deemed released and forever discharged from any liability to
the other by virtue of this Agreement, the ancillary agreements provided for
herein and all acts and omissions of the parties undertaken in reliance upon
the provisions hereof.
SECTION 5: REPRESENTATIONS AND WARRANTIES BY ABS AND SHAREHOLDER
As a material inducement to GAI to enter into this Agreement and with the
understanding and expectations that GAI will be relying thereon in
consummating the stock purchase contemplated hereunder, ABS and Shareholder,
jointly and severally (hereinafter referred to as the "Corporation" or "ABS "
for the purposes of this Section 5 only) represent and warrant as follows:
5.1 ORGANIZATION AND STANDING. ABS is a corporation duly organized,
validly existing and in good standing under the laws of the State of Alaska
and has all requisite corporate power and authority to own its assets and
properties and to carry on its business as it is now being conducted.
5.2 SUBSIDIARIES, ETC. Except as set forth on Exhibit 5.2, the
Corporation does not have any direct or indirect Ownership Interest in any
corporation, partnership, joint venture, association or other business
enterprise.
5.3 QUALIFICATION. Except as set forth on Exhibit 5.3 and for any
jurisdiction where the failure to be qualified to engage in business as a
foreign corporation would not have a material adverse affect on the
Corporation, the Corporation is not qualified to engage in business as a
foreign corporation in any state other than Alaska and there is no other
jurisdiction wherein the character of the properties presently owned by the
Corporation or the nature of the activities presently conducted by the
Corporation makes necessary the qualification, licensing or domestication of
the Corporation as a foreign corporation.
5.4 CORPORATE AUTHORITY. Except as set forth on Exhibit 5.4 hereto,
neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby nor compliance by the Corporation with
any on the provisions hereof will
(a) conflict with or result in a breach of any provision of
its Articles of Incorporation or By-Laws;
(b) result in a default (or give rise to any right of
termination, cancellation, or acceleration) under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation to which the Corporation is a party, or by
which any of its properties or assets may be bound except for such default (or
right of termination, cancellation, or acceleration) as to which requisite
waivers or consents shall either have been obtained by the Corporation prior
to the Closing Date or the obtaining of which shall have been waived by GAI;
or any default which would not have a material adverse effect on ABS, its
business, assets and financial condition.
(c) violate any order, writ, injunction, decree or, to the
Corporation's Best Knowledge, any statute, rule or regulation applicable to
the Corporation or any of its properties or assets, which violation would not
have a material adverse effect on ABS, its business, assets and financial
condition. No consent or approval by any Governmental Authority is required
in connection with the execution and delivery by the Corporation of this
Agreement or the consummation by the Corporation of the transactions
contemplated hereby.
5.5 FINANCIAL STATEMENTS. The following statements are attached to
this Agreement as Exhibit 5.5:
(a) Unaudited financial statements of the Corporation for the
period ending March 31, 1997 (the "Financial Statements");
To the Best Knowledge of ABS, such financial statements,
together with and subject to the disclosures and notes thereto, if any, (i)
are in accordance with the books and records of the Corporation; (ii) present
fairly the financial condition of the Corporation as of March 31, 1997; (iii)
present fairly the results of operations for the periods covered by such
statements; and (iv) have been prepared in accordance with generally-accepted
accounting principles consistently applied and contain all adjustments,
consisting of normal accruals, necessary to present fairly the financial
position and results of operations of the Corporation for the period covered
by such financial statements.
As of Closing, except as disclosed on Exhibit 5.5(a), the
Corporation does not have any liabilities or payables (absolute or contingent,
known or unknown) except for liabilities or payables set forth on the
foregoing financial statements; which have been incurred in the ordinary
course of business since such date or which have not otherwise been disclosed
in writing to GAI on or prior to the Closing Date.
5.6 CAPITALIZATION OF THE CORPORATION. The authorized capital stock
of ABS consists of: (i) 1,000 shares of Common Stock, $2.00 par value, of
which 500 shares of Common Stock are issued and outstanding and will be
outstanding as of the Closing Date. The names of the record owners of the
issued and outstanding Common Stock are set forth on Exhibit 5.6 hereto. All
issued and outstanding shares of ABS Common Stock have been duly authorized
and validly issued and are fully paid and non-assessable. There are no
outstanding rights, options, warrants, subscriptions, calls, convertible
securities or agreement of any character or nature under which the Company is
or may become obligated to issue any shares of its capital stock of any kind,
other than those shares indicated in this Section as presently outstanding and
shares issuable in accordance with the terms of this Agreement.
5.7 NO DEFAULT. Except as set forth on Exhibit 5.7, each of the
leases, contracts, agreements and insurance policies to which ABS is a party
is in full force and effect as of the date hereof with no material defaults
existing thereunder.
5.8 TAXES. Except as set forth in Exhibit 5.8, the Corporation has
filed (or has obtained extensions for filing) all income, excise, sales,
corporate franchise, property, payroll and other tax returns or reports
required to be filed by it, as of the date hereof by the United States of
America, any state or other political subdivision thereof or any foreign
country and has paid all Taxes or assessments shown to be due on such returns
or reports. To the Best Knowledge of the Corporation, except as set forth in
Exhibit 5.8, the amounts set up as provisions for Taxes in the Latest
Financial Statements are sufficient for the payment of all unpaid federal,
foreign, state or local Taxes of the Corporation accrued for or applicable to
all periods ended on or prior to the date of this Agreement, or which may
subsequently be determined to be owing by the Corporation with respect to all
periods ending on or prior to the Closing Date, subject to normal year-end
adjustments, which will not be material. There are no present disputes as to
Taxes of any nature payable by the Corporation.
5.9 NO ACTIONS, PROCEEDINGS, ETC. Except as listed on the attached
Exhibit 5.9, there is no action or proceeding (whether or not purportedly on
behalf of the Corporation) pending or to its knowledge threatened by or
against the Corporation which might result in any material adverse change in
the condition, financial or otherwise, of the Corporation's business or
assets. No order, writ or injunction or decree has been issued by, or
requested of any court or Governmental Agency which does nor may result in any
material adverse change in the Corporation's assets or properties or in the
financial condition or the business of the Corporation. Except for
liabilities referred to in attached Exhibit 5.9, the Corporation is not liable
for damages to any employee or former employee as a result of any violation of
any state, federal or foreign laws directly or indirectly relating to such
employee or former employee.
5.10 POST BALANCE SHEET CHANGES. Except as set forth on the attached
Exhibit 5.10 and as contemplated by this Agreement, since March 31, 1997, the
Corporation has not (a) issued, bought, redeemed or entered into any
agreements, commitments or obligations to sell, buy or redeem any shares of
its capital stock; (b) incurred any obligation or liability (absolute or
contingent), other than current liabilities incurred, and obligations under
contracts entered into, in the ordinary course of business; (c) discharged or
satisfied any lien or encumbrance or paid any obligation or liability
(absolute or contingent), other than current liabilities incurred in the
ordinary course of business; (d) mortgaged, pledged or subjected to lien
charges, or other encumbrance any of its assets, other than the lien of
current or real property taxes not yet due and payable otherwise than in the
ordinary course of business; (e) waived any rights of substantial value,
whether or not in the ordinary course of business; (f) suffered any damage,
destruction or loss, whether or not covered by insurance, materially and
adversely affecting its assets or its business; (g) made or suffered any
amendment or termination of any material contract or any agreement which
materially adversely affects its business; (h) received notice or had
knowledge of any labor trouble other than routine grievance matters, none of
which is material; (i) increased the salaries or other compensation of any of
its directors, officers or employees or made any increase in other benefits to
which employees may be entitled, other than employee salary increases made in
the ordinary course of business and reflected on an Exhibit hereto; (j) sold,
transferred or otherwise disposed of any of its assets, other than in the
ordinary course of business; (k) declared or made any distribution or payments
to any of its shareholders, officers or employees, other than wages and
salaries made to employees in the ordinary course of business; (l) revalued
any of its assets; or (m) entered into any transactions not in the ordinary
course of business.
5.11 NO BREACHES. The Corporation is not in violation of, and the
consummation of the transactions contemplated hereby do not and will not
result in any material breach of, any of the terms or conditions of any
mortgage, bond, indenture, agreement, contract, license or other instrument or
obligation to which the Corporation is a party or by which its assets are
bound which, in the aggregate, would have a material adverse effect upon the
corporation, its business, assets or financial condition; nor will the
consummation of the transactions contemplated hereby cause ABS to violate any
statute, regulation, judgment, writ, injunction or decree of any court,
threatened or entered in a proceeding or action in which the Corporation is,
was or may be bound or to which any of the Corporation's assets are subject.
5.12 CONDITION OF THE CORPORATION'S ASSETS. Except as set forth on
Exhibit 5.12 all of ABS's assets are currently in good and usable condition
and there are no defects or other conditions which, in the aggregate,
materially and adversely affect the operation or values of such assets taken
as a whole. Except as disclosed on Exhibit 5.12, no person other than ABS
(including any officer or employee of the Corporation) has any proprietary
interest in any know-how or other intangible assets used by the Corporation in
the conduct of its business. All product which is currently being marketed by
the Corporation is operable for its intended purposes in accordance with its
written specifications and trade representations.
5.13 INVENTORY. Except as otherwise set forth on Exhibit 5.13, all
inventories reflected in the Corporation's March 31, 1997 financial statements
in excess of the reserves for excess or obsolete inventories are stated at the
lowest of cost, replacement cost or market, and, as so stated, are in good
condition and usable or salable in the category in which they are inventoried,
in the ordinary course of business of the Corporation, without discounts other
than normal trade discounts regularly offered by the Corporation, for prompt
payment or quantity purchase.
5.14 ACCOUNTS RECEIVABLE. The accounts receivable of the Corporation
as set forth on the line item therefor in its March 31, 1997 unaudited
financial statements set forth on Exhibit 5.5 represent valid and enforceable
obligations due to the Corporation, and, except to the extent of the reserve
reflected in the latest financial statements, shall be collectible by the
Corporation in the ordinary course of business. Except as set forth on the
attached Exhibit 5.14, the Corporation has not received any notice of any
material counterclaim or set-off with respect to such accounts receivable.
5.15 CORPORATE ACTS AND PROCEEDINGS. This Agreement has been duly
authorized by all necessary corporate action on behalf of ABS, has been duly
executed and delivered by an authorized officer of ABS, and is a valid and
binding Agreement on the part of ABS that is enforceable against ABS in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium, fraudulent transfers, reorganization or
other similar laws affecting the enforcement of creditors' rights generally
and to judicial limitations on the enforcement of the remedy of specific
performance and other equitable remedies.
5.16 REGISTERED RIGHTS AND PROPRIETARY INFORMATION.
(a) Exhibit 5.16 hereto contains a true and complete list of
all patents, letters patent and patent applications, service marks, trademark
and service xxxx registrations and applications, copyright, copyright
registrations and applications, grants of licenses and rights to the
Corporation with respect to the foregoing, both domestic and foreign, claimed
by the Corporation or used or proposed to be used by the Corporation in the
conduct of its business (collectively herein, "ABS Registered Rights").
Exhibit 5.16 hereto also contains a true and complete list of all and every
trade secret, know-how, process, formula, discovery, development, research,
design, technique, customer and supplier list, contracts, product development
plans, product development concepts, marketing and purchasing strategy,
invention, and any other matter required for, incident to, or related to the
conduct of its business (hereafter collectively the "ABS Proprietary
Information"). Except as described in Exhibit 5.16 hereto, the Corporation is
not obligated or under any liability whatever to make any payments by way of
royalties, fees or otherwise to any owner or licensor of, or other claimant
to, any ABS Registered Right or ABS Proprietary Information with respect to
the use thereof in the conduct of its business or otherwise.
(b) Except as described in Exhibit 5.16 hereto, to the
Corporation's Best Knowledge, the Corporation owns and has the unrestricted
right to use the ABS Registered Rights and ABS Proprietary Information
required for or incident to the design, development, manufacture, operation,
sale and use of all products and services sold or rendered or proposed to be
sold or rendered by the Corporation or relating to the conduct or proposed
conduct of its business free and clear of any right, title, interest, equity
or claim of others. As soon as practicable following the execution of this
Agreement, and except as described in Exhibit 5.16 hereto, the Corporation
agrees to take all necessary steps (including without limitation entering into
appropriate confidentiality, assignment of rights and non-competition
agreements with all officers, directors, employees and consultants of the
Corporation and others with access to or knowledge of the ABS Proprietary
Information) to safeguard and maintain the secrecy and confidentiality of, and
its proprietary rights in, the ABS Proprietary Information and all related
documentation and intellectual property rights therein necessary for the
conduct or proposed conduct of its business.
(c) Except as described in Exhibit 5.16 hereto, the
Corporation has not sold, transferred, assigned, licensed or subjected to any
right, lien, encumbrance or claim of others, any ABS Proprietary Information,
including without limitation any ABS Registered Right, or any interest
therein, related to or required for the design, development, manufacture,
operation, sale or use of any product or service currently under development
or manufactured, or proposed to be developed, sold or manufactured, by it.
Exhibit 5.16 contains a true and complete list and description of all licenses
of ABS Proprietary Information granted to the Corporation by others or to
others by the Corporation. Except as described in Exhibit 5.16 hereto, there
are no claims or demands of any person pertaining to, or any proceedings that
are pending or threatened, which challenge the rights of the Corporation in
respect of any ABS Proprietary Information used in the conduct of its
business.
(d) Except as described in Exhibit 5.16 hereto, the
Corporation owns and on the Closing Date shall own, has and shall have, holds
and shall hold, exclusively all right, title and interest in the ABS
Registered Rights, free and clear of all liens, encumbrances, restrictions,
claims and equities of any kind whatsoever, has and shall have the exclusive
right to use, sell, license or dispose of, and has and shall have the
exclusive right to bring action for the infringement of the ABS Registered
Rights and the ABS Proprietary Information. To the Best Knowledge of
Corporation, the marketing, promotion, distribution or sale by the Corporation
of any products or interests subject to the ABS Registered Rights or making
use of ABS Proprietary Information shall not constitute an infringement of any
patent, copyright, trademark, service xxxx or misappropriation or violation of
any other party's proprietary rights or a violation of any license or
agreement by the Corporation. Except as described in Exhibit 5.16 hereto, to
the knowledge of the Corporation after due inquiry no facts or circumstances
exist that could result in the invalidation of any of the ABS Registered
Rights.
5.17 CHANGES IN SUPPLIERS AND CUSTOMERS. Except as disclosed on
Exhibit 5.17, the Corporation is not aware of any fact which indicates that
any of the suppliers supplying products, components or materials to the
Corporation intends to cease selling such products to the Corporation nor is
the Corporation aware of any fact which indicates that any major customer of
the Corporation intends to terminate its business relations with the
Corporation.
5.18 NO LIENS OR ENCUMBRANCES. The Corporation has good and marketable
title to all of the property and assets, tangible and intangible, employed in
the operations of its business, free of any material mortgages, security
interests, pledges, easements or encumbrances of any kind whatsoever except as
set forth on the attached Exhibit 5.18 and except for such property and assets
as may be leased by ABS, and except for any property which is the subject of
Sections 5.13, 5.14 or 5.16.
5.19 EMPLOYEE MATTERS. Exhibit 5.19 attached hereto contains a true,
complete and accurate list of all employees of the Corporation and the
remuneration of each (including wages, salaries and fringe benefits). The
Corporation has no information or facts indicating that any employee listed on
Exhibit 5.19 intends to terminate his/her employment relationship with the
Corporation prior or subsequent to the Closing Date, except as may be required
by this Agreement. Except as specifically described on Exhibit 5.19, the
Corporation has no employee benefit plans (including, but not limited to,
pension plans and health or welfare plans), arrangements or understandings,
whether formal or informal. The Corporation does not now and has never
contributed to a "multi-employer plan" as defined in Section 400(a)(3) of the
ERISA. The Corporation has complied with all applicable provisions of ERISA
and all rules and regulations promulgated thereunder, and neither the
Corporation nor any trustee, administrator, fiduciary, agent or employee
thereof has at any time been involved in a transaction that would constitute a
"prohibited transaction" within the meaning of Section 406 of ERISA as to any
covered plan of the Corporation. The Corporation is not a party to any
collective bargaining or other union agreement. The Corporation has not,
within the past five (5) years had, or been threatened with, any union
activities, work stoppages or other labor trouble with respect to its
employees which had a material adverse effect on the Corporation, its business
or assets. Except as set forth in Exhibit 5.10, since December 31, 1996, the
Corporation has not made any commitment or agreements to increase the wages or
modify the conditions or terms of employment of any of the employees of the
Corporation used in connection with its business, and between the date of this
Agreement and the Closing Date, the Corporation will not make any agreement to
increase the wages or modify the conditions or terms of employment of any of
the employees of the Corporation used in the conduct of its business, without
the prior written consent of all parties hereto.
5.20 LEGAL PROCEEDINGS AND COMPLIANCE WITH LAW. Except as set forth in
Exhibit 5.20, ABS has not received notice of any legal, administrative,
arbitration or other proceeding or governmental investigation pending or
threatened (including those relating to the health, safety, employment of
labor, or protection of the environment) pertaining to ABS which might result
in the aggregate in money damages payable by ABS in excess of insurance
coverage or which might result in a permanent injunction against ABS or which
would have a material adverse effect on ABS, its business, assets or financial
condition. Except as set forth in such Exhibit, ABS has substantially
complied with, and is not in default in any respect under any laws,
ordinances, requirements, regulations, or orders applicable to the business of
ABS, the violation of which might materially and adversely affect it. Except
as set forth in such Exhibit, ABS is not a party to any agreement or
instrument, nor is it subject to any charter or other corporate restriction or
any judgment, order, writ, injunction, decree, rule, regulation, code or
ordinance which materially and adversely affects, or might reasonably be
expected materially and adversely to affect the business, operations,
prospects, property, assets or condition, financial or otherwise, of ABS.
5.21 CONTRACT SCHEDULES. Attached as Exhibits 5.21(a) to 5.21(e)
hereto are an accurate list of the following:
(a) All contracts, leases, agreements, covenants, licenses,
instruments or commitments of ABS pertaining to the business of ABS calling
for the payment of $5,000 or more or which is otherwise material to the
business of ABS, including, without limitation, the following:
(i) Executory contracts for the sale of products and
services;
(ii) Executory contracts for the purchase, sale or lease
of any assets;
(iii) Management or consulting contracts;
(iv) Patent, trademark and copyright applications,
registrations or licenses, and know-how, intellectual
property and trade secret agreements or other
licenses;
(v) Note agreements, loan agreements, indentures and the
like, other than those entered into and executed in
the ordinary course of business;
(vi) All sales, agency, distributorship or franchise
agreements; and
(vii) Any other contracts not in the ordinary course of
business.
(b) All labor contracts, employment agreements and collective
bargaining agreements to which ABS is a party.
(c) All instruments evidencing any liens or security interest
securing any indebtedness of ABS covering any asset of ABS.
(d) All profit sharing, pension, stock option, severance pay,
retirement, bonus, deferred compensation, group life and health insurance or
other employee benefit plans, agreements, arrangements or commitments of any
nature whatsoever, whether or not legally binding, and all agreements with any
present or former officer, director or shareholder of the Corporation.
(e) Any and all documents, instruments and other writings not
listed in any other schedule hereto which are material to the business
operations of ABS.
Except as set forth in Exhibit 5.21(f), all of such contracts,
agreements, leases, licenses, plans, arrangements and commitments and all
other such items set forth above are valid, binding and in full force and
effect in accordance with their terms and conditions, except as the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
fraudulent transfer, reorganization or other similar laws affecting the
enforcement of contracts generally, and there is no existing material default
thereunder or breach thereof by the Corporation, or to ABS's knowledge by any
party to such contracts, or any conditions which, with the passage of time or
the giving of notice or both, might constitute such a default by the
Corporation or by any other party to the contracts.
5.22 LABOR MATTERS. There are no strikes, slowdowns, stoppages,
organizational efforts, discrimination charges or other labor disputes pending
or, to the knowledge of ABS or any of its agent or employees, threatened
against ABS.
5.23 INSURANCE. ABS maintains in full force and effect insurance
coverage on its assets and business in such amounts and against such risks and
losses as set forth in Exhibit 5.23.
5.24 ENVIRONMENTAL. Except as disclosed on Exhibit 5.24:
(a) no real property (or the subsurface soil and the ground
water thereunder) now or previously owned or leased by ABS (the "Premises")
either contains any Hazardous Substance (as hereinafter defined) or has
underneath it any underground fuel or liquid storage tanks;
(b) there has been no generation, transportation, storage,
treatment or disposal of any Hazardous Substance on or beneath the Premises,
now or in the past;
(c) there is no pending or threatened litigation or
proceedings before any court or administrative agency in which any person
alleges, or threatens to allege, the presence, release, threat of release,
placement on or in the Premises, or the generation, transportation, storage,
treatment or disposal at the Premises, of any Hazardous Substance;
(d) ABS has not received any notice and has no knowledge that
any Governmental Authority or any employee or agent thereof has determined or
alleged, or is investigating the possibility, that there is or has been any
presence, release, threat of release, placement on or in the Premises, or any
generation, transportation, storage, treatment or disposal at the Premises, of
any Hazardous Substance;
(e) there have been no communications or agreements with any
Governmental Authority or agency (federal, state, or local) or any private
person or entity (including, without limitation, any prior owner of the
Premises and any present or former occupant or tenant of the Premises)
relating in any way to the presence, release, threat of release, placement on
or in the Premises, or any generation, transportation, storage, treatment or
disposal at the Premises, of any Hazardous Substance. ABS further agrees and
covenants that ABS will not store or deposit on, otherwise release or bring
onto or beneath, the Premises any Hazardous Substance prior to the Closing
Date; and
(f) there is no litigation, proceeding, citizen's suit or
governmental or other investigation pending, or, threatened, against ABS, and
ABS knows of no facts or circumstances which might give rise to any future
litigation, proceeding, citizen's suit or governmental or other investigation,
which relate to ABS's compliance with environmental laws, regulations, rules,
guidelines and ordinances.
For purposes of this Section 5.24, "Hazardous Substance" shall
mean and include (1) a hazardous substance as defined in 42 U.S.C. Section
9601(14), the Regulations at 40 C.F.R. Part 302, (2) any substance regulated
under the Emergency Planning and Community Right to Know Act (including
without limitation any extremely hazardous substances listed at 40 C.F.R. Part
355 and any toxic chemical listed at 40 C.F.R. Part 372), (3) hazardous wastes
and hazardous substances as specified under any New York state or local
Governmental Requirement governing water pollution, groundwater protection,
air pollution, solid wastes, hazardous wastes, spills and other releases of
toxic or hazardous substances, transportation of hazardous substances,
materials and wastes and occupational or employee health and safety, and (4)
any other material, gas or substance known or suspected to be toxic or
hazardous (including, without limitation, any radioactive substance, methane
gas, volatile hydrocarbon, industrial solvent, and asbestos) or which could
cause a material detriment to, or materially impair the beneficial use of, the
Leased Premises, or constitute a material health, safety or environmental risk
to any person exposed thereto or in contact therewith. For purposes of this
Section 5.24, "Hazardous Substance" shall not mean and shall not include the
following, to the extent used normally and required for everyday uses or
normal housekeeping or maintenance: (A) fuel oil and natural gas for heating,
(B) lubricating, cleaning, coolant and other compounds customarily used in
building maintenance, (C) materials routinely used in the day-to-day
operations of an office, such as copier toner, (D) consumer products, (E)
material reasonably necessary and customarily used in construction and repair
of an office project, and (F) fertilizers, pesticides and herbicides commonly
used for routine office landscaping.
5.25 DISCLOSURE OF INFORMATION. The Corporation represents and
warrants that all statements, data and other written information provided by
it to any party hereto as well as their respective consultants and
representatives have been accurate copies or true originals. The Corporation
represents and warrants that, to its Best Knowledge, (i) there exists no
material information concerning the Corporation which has been requested but
not been disclosed to or made available to the other parties and their
representatives or consultants and which would be material to a decision to
consummate the transactions provided for in this Agreement and (ii) in the
aggregate, such information does not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made in them, in light of the circumstances under which they are
made, not misleading.
SECTION 6: COVENANTS OF ABS AND SHAREHOLDER
6.1 PRESERVATION OF BUSINESS. Until Closing, ABS and Shareholder
shall:
(a) preserve intact the present business organization of ABS;
(b) maintain its property and assets in its present state of
repair, order and condition, reasonable wear and tear excepted;
(c) preserve and protect the goodwill and advantageous
relationships of ABS with its customers and all other persons having
business dealings with ABS;
(d) preserve and maintain in force all licenses, permits,
registrations, franchises, patents, trademarks, tradenames, trade
secrets, service marks, copyrights, bonds and other similar rights of
ABS; and
(e) comply with all laws applicable to the conduct of its
business
6.2 ORDINARY COURSE. ABS and Shareholder shall conduct its business
only in the usual, regular and ordinary course, in substantially the same
manner as previously, and shall not make any substantial change to its methods
of management or operation in respect of such business or property. Without
limiting the foregoing, ABS shall not, with respect to ABS:
ILI sell, mortgage, pledge or encumber or agree to sell,
mortgage, pledge or encumber, any of its property or assets, other than in the
ordinary course of business;
(b) incur any obligation (contingent or otherwise) or
purchase, acquire, transfer, or convey, any material assets or property or
enter into any contract or commitment, except in the ordinary course of
business.
6.3 NEGATIVE COVENANTS. Except as contemplated by this Agreement or
disclosed in Exhibits to this Agreement, from the date hereof until the
Closing Date, unless and until GAI otherwise consents in writing, ABS and
Shareholder will not (a) change or alter the physical contents or character of
the inventories of its business, if any, so as to materially affect the nature
of ABS's business or materially and adversely change the total dollar
valuation of such inventories from that reflected on its March 31, 1997
financial statements referred to in Section 5.5 other than in the ordinary
course of business; (b) incur any obligations or liabilities (absolute or
contingent) other than current liabilities incurred and obligations under
contracts entered into in the ordinary course of business; (c) mortgage,
pledge or voluntarily subject to lien, charge or other encumbrance any assets,
tangible or intangible, other than the lien of current property taxes not due
and payable; (d) sell, assign or transfer any of its assets or cancel any
debts or claims, other than in the ordinary course of business; (e) waive any
right of any substantial value; (f) declare or make any payment or
distribution to Shareholders or issue, purchase or redeem any shares of its
capital stock or other equity securities or issue or sell any rights to
acquire the same; (g) grant any increase in the salary or other compensation
of any of its directors, officers, or employees or make any increase in any
benefits to which such employees might be entitled; (h) institute any bonus,
benefit, profit sharing, stock option, pension, retirement plan or similar
arrangement, or make any changes in any such plans or arrangements presently
existing; or (i) enter into any material transactions or series of
transactions other than in the ordinary course of business, other than as
disclosed in or contemplated by this Agreement.
6.4 ACCESS TO BOOKS AND RECORDS, PREMISES, ETC. From the date of this
Agreement through the Closing Date, ABS and Shareholder will grant GAI and its
authorized representatives reasonable access to its books and records,
premises, products, employees and customers and other parties with whom it has
contractual relations during reasonable business hours and in a manner not to
disrupt or interfere with ABS's business relationships for purposes of
enabling GAI to fully investigate the business of ABS. ABS will also provide
GAI with such updated financial information as GAI may reasonably request.
6.5 COMPENSATION. ABS shall not enter into or agree to enter into any
employment contract or agreement for consulting, professional, or other
services which will adversely and materially affect the operation of ABS prior
to the Closing Date, except for any extensions of said contracts or agreements
on substantially the same terms and conditions as were previously in effect.
6.6 NO SOLICITATION.
(a) Except in connection with the transactions contemplated by
this Agreement, ABS shall not, nor shall it permit any of its subsidiaries to,
nor shall it authorize or permit any officer, director or employee of or any
investment banker, attorney or other advisor or representative of, ABS or any
of its subsidiaries to, (i) solicit, initiate or encourage the submission of,
any takeover proposal, (ii) enter into any agreement with respect to any
takeover proposal or (iii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or take
any other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any takeover
proposal. Without limiting the foregoing, it is understood that any violation
of the restrictions set forth in the preceding sentence by any executive
officer of ABS or any of its subsidiaries or any investment banker, attorney
or other advisor or representatives of ABS or any of its subsidiaries or
otherwise, shall be deemed to be a breach of this Section by ABS. For
purposes of this Agreement, "takeover proposal" means any proposal for a
merger, consolidation or reorganization or other business combination
involving ABS or any of its subsidiaries or any proposal or offer to acquire
in any manner, directly or indirectly, an equity interest in, any voting
securities of, or options, rights, warrants or other interests convertible or
exercisable for or into such voting securities, or a substantial or material
portion of the assets or business of ABS or any of its subsidiaries, other
than the transactions contemplated by this Agreement.
(b) Except upon a material breach of this Agreement by GAI or
following termination hereof, except for action permitted or contemplated by
this Agreement, including a party's right to terminate this Agreement under
certain circumstances, neither the Board of Directors of ABS nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to GAI, the approval or recommendation by such Board of
Directors of any such committee of this Agreement or the Exchange or
(ii) approve or recommend, or propose to approve or recommend, any takeover
proposal.
(c) ABS promptly shall advise GAI orally and in writing of any
takeover proposal or any inquiry with respect to or which could lead to any
takeover proposal and the identity of the person making any such takeover
proposal or inquiry. ABS will keep GAI fully informed of the status and
details of any such takeover proposal or inquiry.
(d) The provisions of this Section 6.6 shall not be construed
to prevent any investment banker, attorney or other advisor or representative
of ABS to engage in discussions with third parties in the ordinary course of
business with respect to transactions not involving the parties to this
Agreement.
SECTION 7: REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
Shareholder represents and warrants to GAI that, as of the date of this
Agreement, and as of the date of Closing, the following are true and accurate:
7.1 SHARE OWNERSHIP. Each Shareholder owns the number of shares of
the common stock of ABS, an Alaska corporation, set forth in Section 7.1
hereof, which shares are fully paid, nonassessable, represent 100% of the
issued and outstanding shares of capital stock and equity securities of ABS,
and will be transferred and assigned to GAI free and clear of any claims,
liens, and encumbrances or other restrictions which would in any way impair
their right to effectively sell or transfer such shares.
7.2 RIGHTS OWNERSHIP. Each Shareholder is the beneficial owner of the
equity rights, including, but not limited to, options, warrants, puts and the
like, in ABS, as are set forth on Exhibit 7.2 hereto, and there are no other
Rights issued and outstanding. The rights set forth on Exhibit 7.2 are owned
by Shareholders and will be assigned to GAI free and clear of any claims,
liens, and encumbrances or other restrictions which would in any way impair
the entitlements represented thereby.
7.3 RESTRICTION ON FUTURE TRANSFER. There are no restrictions on the
transferability of the shares of ABS common stock being transferred to GAI
imposed by or pursuant to the company's Articles of Incorporation, Bylaws or
by any other agreements to which Shareholders or ABS are a party, except for
restrictions imposed by or on account of federal and state securities laws.
SECTION 8: REPRESENTATIONS AND WARRANTIES OF GAI
8.1 ORGANIZATION AND STANDING. GAI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Alaska
and has all requisite corporate power and authority to own its Shares and
properties and to carry on its business as it is now being conducted.
8.2 CORPORATE ACTS AND PROCEEDINGS. This Agreement has been duly
authorized by all necessary corporate action on behalf of GAI, has been duly
executed and delivered by authorized officers of GAI, and is a valid and
binding Agreement on the part of GAI that is enforceable against GAI in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and to judicial
limitations on the enforcement of the remedy of specific performance and other
equitable remedies.
SECTION 9: TERMINATION
9.1 This Agreement may be terminated and abandoned solely as follows:
(a) At any time until the Closing Date by the mutual agreement
of the parties.
(b) By either GAI or ABS, if for any reason the parties have
failed to close this Agreement on or before August 1, 1997, provided that
neither GAI nor Shareholder is then in default thereunder.
(c) By any party hereof, if the other party shall have
breached any representation, warranty or covenant contained in this Agreement
and shall have failed to cure such breach within ten (10) days following
written notice thereof by the party seeking termination.
(d) By any party hereof within ten (10) days of the date of
this Agreement if the results of the due diligence investigation of the other
shall not be satisfactory to such party in its sole discretion.
In the event of any termination pursuant to this Section 9.1
(other than pursuant to subparagraph 9.1(a)), written notice setting forth the
reasons therefor shall forthwith be given by Shareholder, if it is the
terminating party, to GAI, or by GAI, if it is the terminating party, to the
Shareholder.
9.2 EFFECT OF TERMINATION. If the sale and purchase of Shares is
terminated and abandoned as provided for in this Section, this Agreement shall
forthwith become wholly void and of no effect without liability to any party
to this Agreement except for breach of this Agreement.
SECTION 10: INDEMNIFICATION AND REMEDIES FOR BREACH
10.1 INDEMNIFICATION BY GAI.
(a) GAI shall defend, indemnify and hold ABS, Shareholder
harmless against and in respect of any damage, loss, liability, cost or
expense, including expert witness fees and reasonable attorneys' fees, whether
or not recoverable under applicable state law, resulting or arising from or
incurred in connection with:
(i) any misrepresentation, breach of warranty, or
nonfulfillment or nonperformance of any agreement on
the part of GAI under this Agreement, or any
misrepresentation or omission from any exhibit,
schedule, list, certificate or other instrument
furnished or to be furnished by it under this
Agreement, or any noncompliance on the part of GAI
with applicable law.
(ii) any and all liabilities of GAI of any nature
whatsoever, whether accrued, absolute, contingent or
otherwise and whether known or unknown, except to the
extent that any such liability arises from ABS,
Shareholder failure to perform or discharge, when
due, ABS, Shareholder future obligations; and
(iii) any actions, suits, proceedings, damages,
assessments, judgments, costs or expenses incident to
any of the foregoing.
(b) Promptly after the receipt by ABS, Shareholder of notice
of any claim asserted by a third party that may give rise to GAI's liability
to ABS, Shareholder under this Section, ABS, Shareholder shall give to GAI
written notice of such claim, and GAI shall be entitled to participate at its
own expense in the defense of any such claim. ABS, Shareholder shall not pay,
acknowledge, compromise or settle any such claim without the written consent
of GAI, unless such payment, acknowledgment, compromise or settlement results
in a full and complete release and discharge of GAI from any liability.
10.2 INDEMNIFICATION BY ABS, SHAREHOLDER.
(a) ABS, Shareholder shall defend, indemnify and hold GAI
harmless against and in respect of any damage, loss, liability, cost or
expense, including expert witness fees and reasonable attorneys' fees, whether
or not recoverable under applicable state law, resulting or arising from or
incurred in connection with:
(i) any misrepresentation, breach of warranty, or
nonfulfillment or nonperformance of any agreement on
the part of ABS, Shareholder under this Agreement, or
any misrepresentation or omission from any exhibit,
schedule, list, certificate or other instrument
furnished or to be furnished by them under this
Agreement.
(ii) any and all liabilities of ABS, Shareholder of any
nature whatsoever, whether accrued, absolute,
contingent or otherwise and whether known or unknown,
except to the extent that any such liability arises
from GAI's failure to perform or discharge, when due,
GAI's future obligations;
(iii) any actions, suits, proceedings, damages,
assessments, judgments, costs or expenses incident to
any of the foregoing.
(b) Promptly after the receipt by GAI of notice of any claim
asserted by a third party that may give rise to ABS, Shareholder's liability
to GAI under this Section, GAI shall give to ABS, Shareholder written notice
of such claim, and ABS, Shareholder shall be entitled to participate at its
own expense in the defense of any such claim. GAI shall not pay, acknowledge,
compromise or settle any such claim without the written consent of ABS,
Shareholder, unless such payment, acknowledgment, compromise or settlement
results in a full and complete release and discharge of ABS, Shareholder from
any liability.
10.3 ADDITIONAL NOTICE. Notwithstanding the provisions of Sections
10.1 or 10.2 above, promptly after the receipt by any party hereto of notice
of any claim asserted by a third party that may give rise to the liability of
any party for which the right to indemnification may be claimed under this
Section, such party shall give to each other party written notice of such
claim as soon as practicable. The provisions of this Section 10.3 in addition
to and not in lieu of the covenants of the parties contained in Sections 10.1
or 10.2 above.
10.4 DETERMINATION OF DAMAGES AND RELATED MATTERS.
(a) Upon the occurrence of any event which would give rise to
a claim by GAI against, or to a right of defense and indemnity against ABS,
Shareholder pursuant to this Section 10, or in the event that any suit,
action, investigation, claim or proceeding is begun, made or instituted as a
result of which ABS, Shareholder may become obligated to GAI hereunder, GAI
shall give notice to ABS, Shareholder of the occurrence of such event and
shall identify GAI's choice of counsel to represent such investigation, claim
or proceedings, provided that the failure of GAI to give notice shall not
affect the indemnification obligations of ABS, Shareholder hereunder. GAI (i)
shall have the exclusive right to so defend, contest or protect against such
matter utilizing the counsel of GAI's choice (who shall be reasonably
acceptable to a representative of ABS, Shareholder), and (ii). ABS,
Shareholder shall have the right, but not the obligation, to participate, at
its own expense, in the defense thereof by counsel of its choice.
(b) As GAI incurs expenses for which indemnification hereunder
is provided and after any final judgment or award shall have been rendered by
a court, arbitration board or administrative agency of competent jurisdiction,
and the expiration of the time in which to appeal therefrom, or a settlement
shall have been consummated, GAI shall forward to ABS, Shareholder notice of
any sums due and owing by it pursuant to this Agreement with respect to such
matter and it shall be required to pay all of the sums so due and owing to GAI
by certified or bank cashier's check within ten (10) days of such notice.
(c) Upon the occurrence of any event which would give rise to
a claim by ABS, Shareholder against, or to a right of defense and indemnity
against GAI pursuant to this Section 10, or in the event that any suit,
action, investigation, claim or proceeding is begun, made or instituted as a
result of which GAI may become obligated to ABS, Shareholder hereunder, ABS,
Shareholder shall give notice to GAI of the occurrence of such event and shall
identify its choice of counsel to represent such investigation, claim or
proceedings, provided that the failure of ABS, Shareholder or SG to give
notice shall not affect the indemnification obligations of GAI hereunder.
ABS, Shareholder and SG (i) shall have the exclusive right to so defend,
contest or protect against such matter utilizing the counsel of its choice
(who shall be reasonably acceptable to a representative of GAI). GAI shall
have the right, but not the obligation, to participate, at its own expense, in
the defense thereof by counsel of its choice.
(d) As ABS, Shareholder incurs expenses for which
indemnification hereunder is provided and after any final judgment or award
shall have been rendered by a court, arbitration board or administrative
agency of competent jurisdiction, and the expiration of the time in which to
appeal therefrom, or a settlement shall have been consummated, ABS,
Shareholder shall forward to GAI notice of any sums due and owing by it
pursuant to this Agreement with respect to such matter, and GAI shall be
required to pay all of the sums so due and owing to ABS, Shareholder by
certified or bank cashier's check within ten (10) days of such notice.
10.5 REMEDIES FOR BREACH. In the event of any breach of any of the
provisions of this Agreement, including but not limited to any breach of any
covenant, warranty or representation made by any party hereto, the breaching
or defaulting party shall be liable pursuant to the provisions of Sections
10.1 or 10.2 above. In the event of any material breach by any party of any
provision under this Agreement, either party may file suit. Nothing contained
in this Agreement shall be deemed to preclude a party to xxx for or seek
specific performance of the provisions of this Agreement in the appropriate
circumstance.
SECTION 11: NONDISCLOSURE OF CONFIDENTIAL INFORMATION
Each of the parties recognizes and acknowledges that it has and will have
access to certain non-public information of the others which shall be deemed
the confidential information of the other parties that is included in the
Shares (including, but not limited to, business plans, costs, trade secrets,
licenses, research projects, profits, markets, sales, customer lists,
strategies, plans for future development, financial information and any other
information of a similar nature) that after the consummation of the
transactions contemplated hereby will be valuable, special and unique property
of the parties. Information shall not be deemed Confidential Information and
afforded the protections of this Section 11 if, on the Closing Date, such
information has been (i) developed by the receiving party independently of the
disclosing party, (ii) rightfully obtained without restriction by the
receiving party from a third party, provided that the third party had full
legal authority to possess and disclose such information, (iii) publicly
available other than through the fault or negligence of the receiving party,
(iv) released without restriction by the disclosing party to anyone, including
the United States government, or (v) properly and lawfully known to the
receiving party at the time of its disclosure, as evidenced by written
documentation conclusively established to have been in the possession of the
receiving party on the date of such disclosure. Each of the parties agrees
that they will not disclose, and that they will use their best efforts to
prevent disclosure by any other Person of, any such confidential information
to any Person for any purpose or reason whatsoever, except to authorized
representatives of the parties. Notwithstanding, a party may use and disclose
any such confidential information to the extent that a party may become
compelled by Legal Requirements to disclose any such information; provided,
however, that such party shall use all reasonable efforts and shall have
afforded the other parties the opportunity to obtain an appropriate protective
order or other satisfactory assurance of confidential treatment for any such
information compelled to be disclosed. In the event of termination of this
Agreement, each party shall use all reasonable efforts to cause to be
delivered to the other parties, and to retain no copies of, any documents,
work papers and other materials obtained by such party or on such party's
behalf during the conduct of the matters provided for in this Agreement,
whether so obtained before or after the execution hereof. Each of the parties
recognizes and agrees that violation of any of the agreements contained in
this Section 11 will cause irreparable damage or injury to the parties, the
exact amount of which may be impossible to ascertain, and that, for such
reason, among others, the parties shall be entitled to an injunction, without
the necessity of posting bond therefor, restraining any further violation of
such agreements. Such rights to any injunction shall be in addition to, and
not in limitation of, any other rights and remedies the parties may have
against each other.
SECTION 12: EXPENSES
Each of the parties will pay all costs and expenses of its or his
performance and compliance with this Agreement. Notwithstanding the
foregoing, if the Agreement is not consummated by reason of a default of one
of the parties, then the expenses of each of the parties in connection with
the transaction contemplated herein shall be paid by such defaulting Company.
SECTION 13: MISCELLANEOUS
13.1 ATTORNEY'S FEES. In any action at law or in equity or in any
arbitration proceeding, for declaratory relief or to enforce any of the
provisions or rights or obligations under this Agreement, the unsuccessful
party to such proceeding, shall pay the successful party or parties all
statutorily recoverable costs, expenses and reasonable attorneys' fees
incurred by the successful party or parties including without limitation
costs, expenses, and fees on any appeals and the enforcement of any award,
judgment or settlement obtained, such costs, expenses and attorneys' fees
shall be included as part of the judgment. The successful party shall be that
party who obtained substantially the relief or remedy sought, whether by
judgment, compromise, settlement or otherwise.
13.2 SURVIVAL AND INCORPORATION OF REPRESENTATIONS. The
representations, warranties, covenants and agreements made herein or in any
certificates or documents executed in connection herewith shall survive the
execution and delivery thereof, and all statements contained in any
certificate or other document delivered by any party hereunder or in
connection herewith shall be deemed to constitute representations and
warranties made by that party to this Agreement.
13.3 INCORPORATION BY REFERENCE. All appendices to this Agreement and
all documents delivered pursuant to or referred to in this Agreement are
herein incorporated by reference and made a part hereof.
13.4 PARTIES IN INTEREST. Nothing in this Agreement, whether express
or implied, is intended to, or shall, confer any rights or remedies under, or
by reason of, this Agreement, on any person other than the parties hereto and
their respective and proper successors and assigns. Nor shall anything in
this Agreement act to relieve or discharge the obligation or liability of any
third persons to any party to this Agreement.
13.5 AMENDMENTS AND WAIVERS. This Agreement may not be amended, nor
may compliance with any term, covenant, agreement, condition or provision set
forth herein be waived (either generally or in a particular instance and
either retroactively or prospectively) unless such amendment or waiver is
agreed to in writing by all parties hereto.
13.6 WAIVER. No waiver of any breach of any one of the agreements,
terms, conditions, or covenants of this Agreement by the parties shall be
deemed to imply or constitute a waiver of any other agreement, term,
condition, or covenant of this Agreement. The failure of any party to insist
on strict performance of any agreement, term, condition, or covenant, herein
set forth, shall not constitute or be construed as a waiver of the rights of
either or the other thereafter to enforce any other default of such agreement,
term, condition, or covenant; neither shall such failure to insist upon strict
performance be deemed sufficient grounds to enable either party hereto to
forego or subvert or otherwise disregard any other agreement, term, condition,
or covenants of this Agreement.
13.7 GOVERNING LAW - CONSTRUCTION. This Agreement, and the rights and
obligations of the respective parties, shall be governed by and construed in
accordance with the laws of the State of Alaska, excluding conflict of law
provisions which would act to apply the laws of another state.
Notwithstanding the preceding sentence, it is acknowledged that each party
hereto is being represented by, or has waived the right to be represented by,
independent counsel. Accordingly, the parties expressly agree that no
provision of this Agreement shall be construed against any party on the ground
that the party or its counsel drafted the provision. Nor may any provision of
this Agreement be construed against any party on the grounds that party caused
the provision to be present.
13.8 LIMITATION OF ACTIONS. No action may be brought by any party to
this Agreement to enforce any covenant made by any party hereto or to seek
damages or equitable relief arising from any claimed breach or nonperformance
of a covenant, representation, warranty or other performance provided for
herein unless such action is commenced within three (3) years of the date of
Closing. The parties hereto agree to be bound by the aforesaid limitation of
actions notwithstanding the provisions of any applicable statutory limitation
of actions to the contrary. This limitation shall not serve to restrict or
limit any statutory limitation period pertaining to any default under the
Promissory Note obligation described in this Agreement, but rather, any such
action shall be limited by the statutory provisions as governed in the State
of Alaska, from time to time.
13.9 NOTICES. Any notice, communication, offer, acceptance, request,
consent, reply, or advice (herein severally and collectively, for convenience,
called "Notice"), in this Agreement provided or permitted to be given, served,
made, or accepted by any party or person to any other party or parties, person
or persons, hereunder must be in writing, addressed to the party to be
notified at the address set forth below, or such other address as to which one
party notifies the other in writing pursuant to the terms of this Section, and
must be served by (1) telefax or other similar electronic method, or
(2) depositing the same in the United States mail, certified, return receipt
requested and postage paid to the party or parties, person or persons to be
notified or entitled to receive same, or (3) delivering the same in person to
such party.
Notice shall be deemed to have been given immediately when sent by
telefax or other electronic method and seventy-two hours after being deposited
in the United States mail, or when personally delivered in the manner
hereinabove described. Notice provided in any manner not specified above
shall be effective only if and when received by the party or parties, person
or persons to be, or provided to be notified.
All notices, requests, demands and other communications required
or permitted under this Agreement shall be addressed as set forth below:
If GAI, to: Xxxxxxx X. Xxxxxxxxxxx, President
GLOBAL ALASKA INDUSTRIES, INC.
0000 Xxxxxxxxx Xxxxx #000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
With copy to: Xxxxxxxx X. Xxxxxx, Esq.
XXXXXX & XXXXXXX, LLC
0000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
If Seller, to: Xxxx Xxxxxxx
0000 Xxxxxxxx Xxxxx, #0
Xxxxxxxxx, Xxxxxx 00000
With copy to: XXXXXX X. XXXXXXXX
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxx 00000
Any party receiving a facsimile transmission shall be entitled to rely upon a
facsimile transmission to the same extent as if it were an original. Any
party may alter the address to which communications or copies are to be sent
by giving notice of such change of address in conformity with the provisions
of this Section for the giving of notice.
13.10 FAX/COUNTERPARTS. This Agreement may be executed by telex,
telecopy or other facsimile transmission, and such facsimile transmission
shall be valid and binding to the same extent as if it were an original.
Further, this Agreement may be signed in one or more counterparts, all of
which when taken together shall constitute the same documents. For all
evidentiary purposes, any one complete counter set of this Agreement shall be
considered an original.
13.11 CAPTIONS. The caption and heading of various sections and
paragraphs of this Agreement are for convenience only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
13.12 SEVERABILITY. Wherever there is any conflict between any
provision of this Agreement and any statute, law, regulation or judicial
precedent, the latter shall prevail, but in such event the provisions of this
Agreement thus affected shall be curtailed and limited only to the extent
necessary to bring it within the requirement of the law. In the event that
any part, section, paragraph or clause of this Agreement shall be held by a
court of proper jurisdiction to be invalid or unenforceable, the entire
Agreement shall not fail on account thereof, but the balance of the Agreement
shall continue in full force and effect unless such construction would clearly
be contrary to the intention of the parties or would result in unconscionable
injustice.
13.13 JURISDICTION AND VENUE. Jurisdiction over any action, proceeding
or arbitration shall be proper only if filed and maintained in Alaska, and
venue shall be proper therein.
13.14 GOOD FAITH COOPERATION AND ADDITIONAL DOCUMENTS. The parties
shall use their best good faith efforts to fulfill all of the conditions set
forth in this Agreement over which it has control or influence. Each party
covenants and agrees to cooperate in good faith and to enter into and deliver
such other documents and papers as the other party reasonably shall require in
order to consummate the transactions contemplated hereby, provided in each
instance, any such document is in form and substance approved by the parties
and their respective legal counsel.
13.15 LEGAL COUNSEL. Each of the parties are being represented by
independent counsel; GAI acknowledges that it is being represented by Xxxxxxxx
X. Xxxxxx of XXXXXX & XXXXXXX, LLC; and Shareholder by Xxxxxx X. Xxxxxxxx.
13.16 SPECIFIC PERFORMANCE. The obligations of the parties under
Section 11 are unique. If either party should default in its obligations
under said section(s), the parties each acknowledge that it would be extremely
difficult and impracticable to measure the resulting damages; accordingly, the
non-defaulting party, in addition to any other available rights and remedies,
may xxx in equity for injunction (mandatory or prohibitive) or specific
performance (all without the need to post a bond or undertaking of any
nature), and the parties each expressly waive the defense that a remedy at law
in damages is adequate.
13.17 ASSIGNMENT. Neither party may directly or indirectly assign or
delegate, by operation of law or otherwise, all or any portion of
its/their/his rights, obligations or liabilities under this Agreement without
the prior written consent of all other parties, which consent may be withheld
in their respective sole and absolute discretion.
13.18 LIST OF EXHIBITS. The following Exhibits are attached to this
Agreement:
Exhibit 3.2(b ) Convertible Promissory Note
Exhibit 3.2(d)(1) Stock Pledge Agreement
Exhibit 3.2(d)(2) General Security Agreement
Exhibit 4.5(o) Non-Competition Agreements
Exhibit 4.5(v) Opinion of counsel for ABS, Xxxxxx X. Xxxxxxxx
Exhibit 4.7(b)(vi) Certificate of ABS certified independent
accountant
Exhibit 5.2 ABS Ownership Interest in any corporation,
partnership, joint venture, association or
other business enterprise.
Exhibit 5.3 ABS Qualification to engage in business as a
foreign corporation in any state other than
Alaska
Exhibit 5.4 Corporate Authority
Exhibit 5.5 Financial Statements
Exhibit 5.6 ABS record owner of its issued and outstanding
Common Stock
Exhibit 5.7 ABS Disclosure Schedule (Material Defaults)
Exhibit 5.8 ABS Exceptions to Timely Filing of Taxes; Tax
Related Disputes
Exhibit 5.9 ABS Pending or Threatened Actions or Proceedings
Exhibit 5.10 ABS Third Party Proprietary Interest in
Intangible Shares
Exhibit 5.12 ABS Exceptions to Inventory Valuation, Condition
and Marketability
Exhibit 5.13 ABS unusable or unsalable inventories
Exhibit 5.14 ABS material counterclaim or set-off with
respect to accounts receivable
Exhibit 5.16 ABS Registered Rights
Exhibit 5.17 ABS Customer relations
Exhibit 5.18 ABS leased property and assets
Exhibit 5.19 ABS Employees and employee remuneration
Exhibit 5.20 ABS Pending or Threatened Legal, Administrative,
or Other Proceedings or Governmental
Investigation, Exceptions to Compliance
with Laws, Ordinances, Requirements,
Regulations, or Orders
Exhibits 5.21(a)
to 5.21(e) ABS Contract Schedules
Exhibit 5.21(f) ABS Contract Defaults
Exhibit 5.24 ABS Environmental Concerns: Hazardous Waste
Production, Storage, etc.
13.19 ENTIRE AGREEMENT - AMENDMENT. For purposes of this Section,
the term "Agreement" shall include this Agreement and the Exhibits and other
documents attached hereto or described in Section 13.18. This Agreement, and
other documents delivered pursuant to this Agreement, contain all of the terms
and conditions agreed upon by the parties relating to the subject matter of
this Agreement and supersede all prior and contemporaneous agreements, letters
of intent, representations, warranties, disclosures, negotiations,
correspondence, undertakings and communications of the parties, oral or
written, respecting that subject matter.
13.20 AUTHORITY TO SIGN. Each of the persons signing below on behalf
of any party hereby represents and warrants that s/he or it is signing with
full and complete authority to bind the party on whose behalf of whom s/he or
it is signing, to each and every term of this Agreement.
13.21 EXECUTION OF DOCUMENTS. The parties hereto agree to execute
and deliver any and all other documents necessary and convenient to effectuate
the exchange of stock herein provided for, and Shareholder as an inducing
condition, represent that it has the authority to enter into this Agreement
and to make the foregoing commitments for itself.
13.22 TIME. Time is of the essence of this Agreement and each of its
provisions.
IN WITNESS WHEREOF, the parties have signed the Agreement the date and
year first above written.
GLOBAL ALASKA INDUSTRIES, INC.,
ATTEST: An Alaska corporation
/s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxxx
------------------------- ------------------------------------------
Xxxxxxx X. Xxxxxxx Xxxxxxx X. Xxxxxxxxxxx, President
ALASKA BINGO SUPPLY, INC.,
ATTEST: An Alaska corporation
/s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxx Xxxxxxx
------------------------- ------------------------------------------
Xxxx Xxxxxxx, President
SHAREHOLDER:
/s/ Xxxx Xxxxxxx
------------------------------------------
XXXX XXXXXXX, individually
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