ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "Agreement"), is made this 30th day of
October, 1998, by and among American Bingo & Gaming Corp., a Delaware
corporation ("Purchaser"), Strike It Rich Bingo, Inc., a Texas corporation (the
"Acquired Company"), and Xxxx Xxxx Xxxxx (the "Shareholders").
W I T N E S S E T H :
WHEREAS, the parties hereto desire to enter into this Agreement pursuant to
which Purchaser will purchase from the Shareholders all of the issued and
outstanding shares of the capital stock of the Acquired Company upon the terms
and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
receipt, sufficiency and adequacy of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
I. DEFINITIONS.
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Unless the context requires otherwise, capitalized terms used in this
Agreement shall have the meaning set forth in the Glossary attached to this
Agreement.
II. STOCK PURCHASE.
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2.1 Purchase and Sale of Stock. Subject to the terms and conditions
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hereinafter set forth, the Shareholders shall, at the Closing, sell, assign,
transfer, convey and deliver to Purchaser, free and clear of all liens, claims,
charges, security interests and other encumbrances of any nature whatsoever, all
of the issued and outstanding shares of capital stock of the Acquired Company.
Such sale, transfer, conveyance and delivery shall be evidenced by delivery of
share certificates duly endorsed in blank (with signatures guaranteed and with
all necessary transfer taxes paid or other revenue stamps affixed thereto).
2.2 Purchase Price. Purchaser shall pay as full payment for all of the
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shares of capital stock of the Acquired Company the following:
(a) $215,000 in cash or cash equivalent, to be paid at the Closing;
(b) Unregistered shares of Purchaser's Common Stock (the "ABG Common
Stock") equal to $15,000 based on the closing price of such stock on
October 29, 1998, which certificates for the ABG Common Stock shall be
issued and delivered within forty-five days after the Closing Date; and
(c) An adjustment to the cash portion of the purchase price which
shall be paid by Purchaser to the Shareholders, or refunded by the
Shareholders to Purchaser, as appropriate, within forty-five days after the
Closing Date, which amount of the adjustment shall be calculated as
follows: (i) add the Acquired Company's cash balance as of the Closing
Date, (ii) add the accounts receivable of the Acquired Company as of the
Closing Date, but only to the extent such accounts receivable relate to
operations of the Acquired Company prior to the Closing Date and are
collectible, and (iii) less all accounts payable and notes payable of the
Acquired Company as of the Closing Date, including all invoices or
statements issued after the Closing Date which relate to expenses or costs
incurred in the operations of the Acquired Company prior to the Closing
Date. The amount of such adjustment shall be calculated by Purchaser after
the Closing Date and provided to the Shareholders with supporting
documentation.
III. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRED COMPANY AND THE
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SHAREHOLDERS.
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The Acquired Company and the Shareholders, jointly and severally, represent
and warrant to Purchaser as follows:
3.1 Organization, Standing and Foreign Qualification.
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(a) The Acquired Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas and
has the requisite corporate power and authority to carry on its
business in the places and as it is now being conducted and to own and
lease the properties and assets which it now owns or leases.
(b) The Acquired Company is duly registered to transact business
and is in good standing in the jurisdictions listed in Exhibit 3.1,
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and the character of the property owned or leased by the Acquired
Company and the nature of the business conducted by it does not
require such registration in any other jurisdiction.
3.2 Authority and Status.
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(a) Each of the Shareholders and the Acquired Company has the
capacity and authority to execute and deliver this Agreement, to
perform hereunder and to consummate the transactions contemplated
hereby without the necessity of any act or consent of any other
Person, except as set forth on Exhibits 3.10 or 3.11.
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(b) The execution, delivery and performance by the Acquired
Company of this Agreement and each and every other agreement, document
and instrument provided for herein have been duly authorized and
approved by the Board of Directors of the Acquired Company and no
further approvals on the part of the Acquired Company are required.
(c) This Agreement and each and every agreement, document and
instrument to be executed, delivered and performed by the Acquired
Company or any Shareholder in connection herewith constitute or will,
when executed and delivered, constitute the valid and legally binding
obligations of the Acquired Company and each Shareholder, as the case
may be, enforceable against each of them in accordance with their
respective terms.
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(d) The Acquired Company has provided Purchaser with true,
correct and complete copies of the Articles of Incorporation and
Bylaws of the Acquired Company and all amendments thereto, as
presently in effect.
3.3 Capitalization; Ownership.
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(a) The entire authorized capital stock of the Acquired Company
consists of 1,000,000 shares of Common Stock, $0.10 par value. Exhibit
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3.3 contains a true, accurate and complete listing of the total number
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of shares of Common Stock of the Acquired Company outstanding. Exhibit
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3.3 also contains a true, accurate and complete listing of all the
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shareholders of the Acquired Company, along with the number of shares
owned by each shareholder and such shareholder's full name and mailing
address.
(b) All of the currently outstanding shares of Common Stock of
the Acquired Company are duly authorized, validly issued, fully paid
and nonassessable. The Common Stock of the Acquired Company is not
subject to, and no shares of Common Stock of the Acquired Company have
been issued in violation of, any preemptive rights or any right of
first refusal or other similar right in favor of any Person.
(c) The Shareholders have good and marketable title to their
shares, free and clear of all liens, encumbrances, claims and other
charges of every kind. The Shareholders have the full right to
transfer their shares to Purchaser free and clear of all liens,
encumbrances, claims and other charges of every kind and without
violating any agreement or understanding to which the Acquired Company
or the Shareholders or any of them are a party or by which they or any
of them are bound.
(d) Except as set forth on Exhibit 3.3, there are no outstanding
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options, warrants, calls, commitments or plans by the Acquired Company
to issue any additional shares of its Common Stock, to pay any
dividends on such shares or to purchase, redeem, or retire any
outstanding shares of its Common Stock, nor are there outstanding any
securities or obligations which are or may become convertible into or
exchangeable for any shares of Common Stock of the Acquired Company.
There are no voting trusts or other Contracts to which the Acquired
Company or any of the Shareholders is a party or is bound with respect
to the voting of the Common Stock of the Acquired Company.
3.4 Absence of Equity Investments. Except as described in Exhibit 3.4, the
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Acquired Company does not, either directly or indirectly, own of record or
beneficially any shares or other equity interests in any corporation,
partnership, limited partnership, joint venture, trust or other business
enterprise. Except as described in Exhibit 3.4, none of the Shareholders,
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directly or indirectly, own of record or beneficially any shares or other equity
interests in any corporation (except as a stockholder holding an interest of
less than one percent (1%) in a corporation whose shares are traded on a
national or regional securities exchange or in the over-the-counter-market),
partnership, limited partnership, joint venture, trust or other business
enterprise, all or any portion of the business of which is competitive or
complementary with that of the Acquired Company.
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3.5 Corporate Records. The minute books of the Acquired Company are
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current, and include all entries required by Applicable Laws. All charter
documents, including all amendments thereto and restatements thereof, and all
minutes of meetings, resolutions and other proceedings of the Board of Directors
and shareholders of the Acquired Company are duly signed by appropriate officers
or directors, are otherwise complete and current in all respects, and the stock
record book of the Acquired Company is complete and current. The Acquired
Company has provided Purchaser with true, correct and complete copies of all
such corporate records.
3.6 Financial Statements; Liabilities and Obligations of the Acquired
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Company.
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(a) Included in Exhibit 3.6(a) are true, correct and complete copies
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of the Acquired Company's unaudited balance sheets as of December 31, 1996
and December 31, 1997 and the related statements of income for the years
then ended (respectively, the "1996 and 1997 Financial Statements"). Also
enclosed therein are true, correct, and complete copies of the Acquired
Company's unaudited balance sheet as of September 30, 1998 and the related
unaudited statement of income for the nine-month period then ended (the
"Interim Financial Statements"). The 1996 and 1997 Financial Statements and
the Interim Financial Statements (i) are complete; (ii) were prepared in
accordance with the books of account and other financial records of the
Acquired Company; (iii) have been prepared in accordance with generally
accepted accounting principles (except that the Financial Statements do not
contain any notes thereto) consistently applied; and (iv) fairly present
the financial condition of the Acquired Company as of the respective dates
thereof.
(b) The Acquired Company has no liability or obligation (whether
accrued, absolute, contingent or otherwise) except for (i) the liabilities
and obligations of the Acquired Company that are disclosed on Exhibit
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3.6.(b) or reserved against in the Interim Financial Statements, to the
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extent and in the amounts so disclosed or reserved against, and (ii)
liabilities incurred or accrued in the ordinary course of business since
the date of the Interim Financial Statements, not to exceed $5,000, which
liabilities do not, either individually or in the aggregate, have an
adverse effect on the businesses, properties, rights, operations or
financial condition of the Acquired Company, and (c) liabilities incurred
in connection with the transactions referred to herein.
(c) Except as disclosed in the Interim Financial Statements or Exhibit
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3.6(b), the Acquired Company is not in default with respect to any
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liabilities or obligations, and all such liabilities or obligations shown
or reflected in the Interim Financial Statements or Exhibit 3.6(b) and such
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liabilities incurred or accrued subsequent to the date of the Interim
Financial Statements have been, or are being, paid and discharged as they
become due, and all such liabilities and obligations were incurred in the
ordinary course of business except as indicated on Exhibit 3.6(b).
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(d) Except as disclosed on Exhibit 3.6(d), there are no loans,
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advances or other like amounts, including any interest due thereon, from
any shareholder, director, employee or former shareholder of the Acquired
Company. Except as set forth on Exhibit 3.6(d), the Acquired Company does
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not have any off-balance sheet undertakings, including, but not limited to,
any guarantees (in any form whatsoever, including as a comfort letter),
sureties, warranties or securities with regard to the performance of
obligations contracted by third parties (including partners, shareholders,
corporate officers or members of its staff). The Acquired Company is not
participating in any portage operations, interest rate or exchange rate
swap Contracts, or derivative transactions, nor is it bound by any
Contracts made on a futures market.
(e) All of the accounts receivable of the Acquired Company reflect
actual transactions, have arisen in the ordinary course of business, are
not subject to offset, deduction or counterclaim and will be collectible
within three (3) months after the Closing Date at the aggregate recorded
amounts thereof.
3.7 Tax Returns.
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(a) The Acquired Company has timely and accurately filed all returns
and reports as required by Applicable Laws with respect to Taxes and has
timely paid all Taxes shown on such returns as owed for the periods of such
returns, including all withholding or other payroll related taxes shown on
such returns. All such returns and reports are correct and complete.
(b) The tax basis of all assets of the Acquired Company as reflected
on its books and records is correct and accurate for use in tax periods
ending after the Closing Date.
(c) Except as described on Exhibit 3.7, the Acquired Company is not,
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and will not become, subject to any additional Taxes, interest, penalties
or other similar charges as a result of the failure to file timely or
accurately, as required by any Applicable Laws, any such return or report
or to pay timely any amount shown to be due thereon, including, without
limitation, any such Taxes, interest, penalties or charges resulting from
the obtaining of an extension of time to file any return or to pay any
Taxes.
(d) No assessments or notices of deficiency or other communications
have been received by the Acquired Company with respect to any such return
or report for Taxes which have not been paid, discharged or fully reserved
against in the Interim Financial Statements or disclosed on Exhibit 3.7,
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and no amendments or applications for refund have been filed or are planned
with respect to any such return or report.
(e) There are no agreements between the Acquired Company and any
Regulatory Authority waiving or extending any statute of limitations with
respect to any return or report for Taxes, and the Acquired Company has not
filed any consent or election including, without limitation, any election
under Section 341(f) of the Code, other than such consents and elections,
if any, reflected in the Acquired Company's federal income tax return for
its taxable year ended December 31, 1997.
(f) The Acquired Company has provided Purchaser with copies of all
returns and reports for all open tax years prior to the date of this
Agreement.
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3.8 Ownership of Tangible Assets and Leases.
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(a) Exhibit 3.8 sets forth a true, accurate and complete list and a
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brief description of all real property and tangible personal property,
owned, leased or licensed by the Acquired Company or otherwise used in its
business (such list identifying which of such properties are owned by the
Acquired Company and all of the leases, licenses or agreements under which
the Acquired Company is lessee or licensee of or holds or operates any
property, real or personal, and the location of such property). Such
property constitutes all properties and assets which are necessary to
conduct the business of the Acquired Company.
(b) The Acquired Company has good and marketable title to all of its
property and assets, other than leased or licensed property, including
those listed and described on Exhibit 3.8 as owned property and assets, in
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each case free and clear of any Liens, except as disclosed on Exhibit 3.8.
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(c) Neither the Acquired Company nor any of the Shareholders has
received any payment from a lessor or licensor in connection with or as
inducement for entering into a Contract in which the Acquired Company is a
lessee or licensee.
(d) All buildings, machinery, equipment and other real or tangible
personal property owned or leased by the Acquired Company are in good
operating condition and state of repair, subject only to ordinary wear and
tear and are adequate and suitable for the purposes for which they are
presently being used.
(e) Except pursuant to this Agreement, the Acquired Company has not
granted to anyone an absolute or contingent right to purchase, obtain or
acquire any rights in any items of the assets, properties or operations
which are owned by the Acquired Company or which are used in connection
with the business of the Acquired Company.
(f) Except as set forth on Exhibit 3.8, no real property owned, leased
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or used by the Acquired Company lies in an area which is, or to the
knowledge of the Acquired Company or any Shareholder, will be, subject to
zoning, use or building code restrictions which would prohibit, and the
Acquired Company and the Shareholders are not aware of any facts relating
to the acts of another person or entity or its ownership, leasing,
licensing or use of any real or personal property which would prevent, the
continued effective ownership, leasing and use of such real property by the
Acquired Company in the businesses currently conducted and/or contemplated
to be conducted.
3.9 Agreement Does Not Violate Other Instruments. Except as listed on
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Exhibit 3.9, the execution and delivery by the Acquired Company and the
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Shareholders of this Agreement and the other agreements and instruments to be
executed and delivered in connection with the transactions contemplated hereby
or thereby does not, and the consummation of the transactions contemplated
hereby or thereby will not violate or conflict with (i) any provision of the
Articles of Incorporation, as amended, or Bylaws, as amended, of the Acquired
Company; (ii) any Applicable Laws to which the Acquired Company or any of the
Shareholders is subject; (iii) any judgement, ruling, order, writ, injunction or
decree of any court or of any Regulatory Authority to which the Acquired Company
or any Shareholder is a party or bound or by which the Acquired Company's assets
or business are affected; (iv) or constitute an occurrence of default under any
provision of, or result in acceleration of any obligation under, or give rise to
a contractual right by any party to terminate its obligations under any
mortgage, deed of trust, conveyance to secure debt, note, bond, loan, lien,
lease, agreement, instrument, or other Contract, to which the Acquired Company
or any Shareholder is a party or is bound or by which the Acquired Company's
assets or business are affected.
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3.10 Required Governmental Consents. Except as listed on Exhibit 3.10, no
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consent, approval, order, certification, permission or authorization of, notice
to, exemption by, or registration, declaration, recording or filing with, any
Regulatory Authority is required to be obtained or made by or with respect to
the Acquired Company, any Shareholder or any assets, properties or operations of
the Acquired Company in connection with the execution and delivery by the
Acquired Company and the Shareholders of this Agreement or the consummation of
the transactions contemplated hereby.
3.11 Other Required Consents. Except as set forth in Exhibit 3.11, no
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approval, authorization, consent, permission, or waiver to or from, or notice,
filing, or recording to or with, any Person (other than the governmental
authorities addressed in Section 3.10) is necessary for (a) the execution and
delivery of this Agreement and the other agreements and instruments to be
executed and delivered in connection with the transactions contemplated hereby
or thereby by the Acquired Company and the Shareholders or the consummation by
the Acquired Company and the Shareholders of the transactions contemplated
hereby; or (b) the acquisition by Purchaser of all the capital stock of the
Acquired Company.
3.12 Absence of Changes. Since December 31, 1997, the Acquired Company has
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not, except as disclosed on Exhibit 3.12:
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(a) Transferred, assigned, conveyed or liquidated into current assets
any of its assets or business or entered into any transaction or incurred
any liability or obligation, other than in the ordinary course of its
business;
(b) Suffered any adverse change in its business, properties, rights,
operations or financial condition (whether absolute, accrued, contingent or
otherwise), or become aware of any event or state of facts which may result
in any such adverse change;
(c) Suffered any destruction, damage or loss, whether or not covered
by insurance;
(d) Suffered, permitted or incurred the imposition of any Lien, except
for any current year lien with respect to personal or real property ad
valorem taxes not yet due and payable;
(e) Committed, suffered, permitted or incurred any default in any
liability or obligation;
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(f) Made or agreed to any adverse change in the terms of any Contract
or instrument to which it is a party;
(g) Waived, canceled, sold or otherwise disposed of, for less than the
face amount thereof, any claim or right which it has against others;
(h) Declared, promised or made any distribution or other payment to
its shareholders (other than reasonable compensation for services actually
rendered and ordinary distributions made to the Shareholders due to the
Acquired Company's status as an S corporation) or issued any additional
shares or rights, options, warrants or calls with respect to the Acquired
Company's shares (except as listed on Exhibit 3.3), or redeemed, purchased
or otherwise acquired any of the Acquired Company's shares, or made any
change whatsoever in the Acquired Company's capital structure;
(i) Paid, agreed to pay or incurred any obligation for any payment for
any contribution or other amount to, or with respect to, any employee
Benefit Plan (except for the payment of health, disability and life
insurance premiums which became due pursuant to the terms of applicable
policies), or paid any bonus to, or granted any increase in the
compensation of, the Acquired Company's directors, officers, agents or
employees, or made any increase in the pension, retirement or other
benefits of its directors, officers, agents or other employees;
(j) Committed, suffered, permitted or incurred any transaction or
event which would increase its tax liability for any prior taxable year;
(k) Incurred any other liability or obligation or entered into any
transaction other than in the ordinary course of business;
(l) Received any notices, or had reason to believe, that any supplier
or customer has taken or contemplates any steps which could disrupt the
business relationship of the Acquired Company with said supplier or
customer or could result in the diminution in the value of the Acquired
Company as a going concern;
(m) Paid, agreed to pay or incurred any obligation for any payment of
any indebtedness, except current liabilities incurred in the ordinary
course of business and except for payments as they become due pursuant to
Contracts referred to in Section 3.16;
(n) Changed any accounting methods, practices or principles or systems
of internal accounting controls;
(o) Written off as uncollectible any notes or accounts receivable in
excess of $5,000.00 in the aggregate;
(p) Written down the value of any asset or investment on its books or
records, except for depreciation and amortization taken in the ordinary
course of business and consistent with past practice;
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(q) Adopted or made any change in any Benefit Plan;
(r) Made any change in the customary methods of operations of the
business of the Acquired Company, including but not limited to practices
and policies relating to purchasing, inventory, marketing, selling or
pricing;
(s) Become aware, nor has any Shareholder become aware, of any fact
which will have a material adverse effect or in the future (as far as the
Acquired Company or any Shareholder can foresee) may have a material
adverse effect on the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the Acquired
Company which has not been disclosed to Purchaser in this Agreement;
provided, however, that the Acquired Company and the Shareholders express
no opinion as to political or economic matters of general applicability; or
(t) Entered into any Contract to take any action described in this
Section 3.12.
3.13 Litigation. Except as otherwise set forth in Exhibit 3.13, there is no
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litigation, suit, action, indictment, claim, investigation, or administrative,
arbitration or other proceedings (including grand jury investigations, actions
or proceedings and workers' compensation suits, actions or proceedings) pending,
proposed or threatened against or affecting the Shareholders, the Acquired
Company or its officers, directors or employees and there exists no basis or
grounds for any such suit, action, proceeding, claim or investigation. None of
the items described in Exhibit 3.13, singly or in the aggregate, if pursued
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and/or resulted in a judgment, would have an adverse effect on the businesses,
properties, rights, operations or financial condition of the Acquired Company or
the right of the Acquired Company or any Shareholder to consummate the
transactions contemplated hereby, and neither the Acquired Company nor any of
the Shareholders are aware of any valid grounds for the assertion of any such
claim.
3.14 Permits. The Acquired Company holds all Permits from all Regulatory
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Authorities necessary for the conduct of its business and the use of its assets.
All such Permits held by the Acquired Company are listed on Exhibit 3.14, which
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Exhibit 3.14 identifies those Permits expiring within three months, those that
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are conditional, and those that are temporary. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will result in the termination of any Permit held by the Acquired Company
and all such Permits will remain in full force and effect after consummation of
the transactions contemplated by this Agreement. All applications for renewal of
currently existing Permits for which renewal applications are required, have
been timely filed.
3.15 Court Orders; Compliance with Laws. Except as set forth in Exhibit
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3.15, the Acquired Company has conducted its business so as to comply in all
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respects with all Applicable Laws. There is no outstanding judgment, order,
writ, injunction, decree, stipulation or award (whether rendered by a court, a
Regulatory Authority or by arbitration pursuant to a grievance or other
procedure) against, affecting or relating to the Acquired Company, its business
or its assets. The Acquired Company neither is presently charged with nor, to
the knowledge of the Acquired Company and the Shareholders, is under
investigation by any Regulatory Authority with respect to any actual or alleged
violation of any Applicable Laws, nor is presently the subject of any pending or
threatened adverse proceeding by any Regulatory Authority having jurisdiction
over its business, assets or operations.
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3.16 Contracts, Etc. Exhibit 3.16 hereto consists of a true and complete
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list of all Contracts (other than those listed in Exhibits 3.8; 3.17; 3.19; and
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3.21), to which the Acquired Company is a party and a brief description of the
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subject matter of each such Contract. Except as set forth in Exhibits 3.8; 3.16;
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3.17; 3.19; or 3.21, the Acquired Company is not a party, or subject to,
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any of the following:
(a) Any Contracts, the consummation or performance of which would,
either singly or in the aggregate, have an adverse impact upon its
businesses, properties, rights, operations or financial condition;
(b) Any Contract that is outside of the normal, ordinary and usual
requirements of its business or, for Contracts involving amounts in excess
of $5,000.00, at a price or prices in excess of those otherwise available
at the time such Contract was entered into;
(c) Any Contract that requires services to be provided or performed by
the Acquired Company or which authorizes others to perform services for,
through or on behalf of the Acquired Company;
(d) Any Contract involving amounts in excess of $5,000.00 and
involving an obligation that cannot be terminated on thirty (30) days
notice;
(e) Any Contract affecting the ownership or leasing of, title to or
use of any interest in real or tangible personal property and any
maintenance or service Contract relating to any real or tangible personal
property;
(f) Any note receivable;
(g) Any Contract providing for payments based in any manner upon the
sales, purchases, receipts, income or profits of the Acquired Company;
(h) Any single Contract or sales or purchase order, which involves
future payments, performance of services or delivery of goods and/or
materials, to or by the Acquired Company with an amount or value in the
aggregate in excess of Three Thousand Dollars ($3,000.00) (other than trade
accounts payable incurred in the ordinary course of business with an amount
or value not in excess of Six Thousand Dollars ($6,000.00));
(i) Any franchise agreement, marketing agreement or royalty agreement,
and with respect to each such agreement, Exhibit 3.16 sets forth the
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aggregate royalties or similar payments paid or payable by the Acquired
Company as of the date hereof;
(j) Any Contract with a creditor not made in the ordinary course of
business or any Contract with a charity which has special terms or
conditions;
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(k) Any Contract regarding employees or independent contractors
(including without limitation any standard form contracts such as employee
nondisclosure agreements or consultant/employee agreements), or for any
continuing payment of any type or nature, including, without limitation,
any severance, termination, parachute, or other payments (whether due to a
change in control, termination or otherwise) and bonuses and vested
commissions. Exhibit 3.16 also includes a listing of any such agreements
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for which the standard form was modified. Other than the standard form
agreements listed on Exhibit 3.16 and those listed variations from the
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standard form agreements, there are no other agreements of the type
referred to in this Section 3.16(k);
(l) Any plan or other arrangement providing for life insurance,
pensions, stock rights, distributions, options, deferred compensation,
retirement payments, profit sharing, medical reimbursements or other
benefits for directors, officers, employees or independent contractors;
(m) Any Contract restricting the Acquired Company from carrying on any
business anywhere in the world;
(n) Any Contract evidencing or related to indebtedness for money
borrowed or to be borrowed, whether directly or indirectly, by way of
purchase money obligation, guaranty, subordination, conditional sale,
lease-purchase, chattel mortgage or otherwise. Except as disclosed in
Exhibit 3.16, no such indebtedness of the Acquired Company provides for any
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prepayment penalty or premium or has any compensating balance requirements;
(o) Any Contract with any labor organization;
(p) Any policy of life, fire, liability, medical or other form of
insurance;
(q) Any order or written approval of any Regulatory Authority required to
conduct the business;
(r) Any Contract between any Shareholder and the Acquired Company; or
(s) Any Contract, not of the type covered by any of the other items of this
Section 3.16, that is not in the ordinary course of business or that has an
adverse impact on the business or assets of the Acquired Company.
The Acquired Company has provided Purchaser with a true, correct and
complete copy of each such Contract. All of the Contracts described in
Exhibits 3.8; 3.16; 3.17; 3.19; or 3.21 are valid and binding upon the
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Acquired Company and the other parties thereto and are in full force and
effect and enforceable in accordance with their terms, subject to
bankruptcy and other debtor relief laws, and neither the Acquired Company,
nor any other party to any such Contract has breached any provision of, or
is in default under, the terms thereof, and no event has occurred which
constitutes or, with the lapse of time or the giving of notice or both,
would constitute such a breach or default by the Acquired Company or any
other party thereto. No party to any such Contract has given notice of its
intent to terminate or cancel any such Contract and none of the rights of
the Acquired Company under such Contracts will be impaired by the delivery,
execution and performance of this Agreement or the consummation of the
transactions contemplated hereby. Except for terms specifically described
in Exhibit 3.16, neither the Acquired Company nor any Shareholder has
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received any payment from any contracting party in connection with or as an
inducement for entering into any Contract.
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3.17 Intellectual Property. Exhibit 3.17 contains a complete list of all
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Intellectual Property. Except as indicated on Exhibit 3.17, the Acquired Company
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has valid, binding and enforceable title to, or in the case of Intellectual
Property being licensed by the Acquired Company, has valid, binding and
enforceable rights to use all Intellectual Property without any conflict with
the rights or claims of others. The Acquired Company is the sole and exclusive
owner of the Intellectual Property and has the sole and exclusive right to use
the Intellectual Property listed thereon, in each case free and clear of any and
all Liens and subject to no interference or other contest proceeding. The
Acquired Company has not received any notice from any other person pertaining to
or challenging the right of the Acquired Company to use any Intellectual
Property. The Acquired Company has not granted any outstanding licenses or other
rights, or any obligations to grant licenses or other rights, to any of the
Intellectual Property. No claims have been made by the Acquired Company of any
violation or infringement by any other Person of the rights of the Acquired
Company with respect to any Intellectual Property of the Acquired Company, and
there is no basis for the making of any such claim. The Acquired Company is not
infringing or otherwise violating the rights of any other Person with respect to
the intellectual property rights of such Person.
3.18 Labor Matters.
-------------
(a) Exhibit 3.18 sets forth a list of all current employees and
-------------
independent contractors of the Acquired Company and their current salaries
or rates and any other compensation and the Acquired Company's salary
increase guidelines. Exhibit 3.18 sets forth a true, correct and complete
------------
list of employer loans or advances from the Acquired Company to its
employees.
(b) Within the last three (3) years the Acquired Company has not been
the subject of any union activity or labor dispute, nor has there been any
strike of any kind called or threatened to be called against it.
(c) There is no, and since December 31, 1997, there has not been any,
condition or state of facts which may affect the Acquired Company's
relations with its employees and no employees of the Acquired Company, or
group of employees, the loss of whom would have an adverse effect on the
business of the Acquired Company, has notified the Acquired Company within
the nine-month period prior to the date hereof of his or their intent to
terminate his or their relationship with the Acquired Company, or make any
demand for material payments or modifications of his or their arrangements
with the Acquired Company. There has not been, and the Acquired Company and
the Shareholders have no knowledge of, any adverse changes in relations
with employees and independent contractors of the Acquired Company as a
result of the transactions contemplated by this Agreement.
12
(d) The Acquired Company's relationship with each Person that the
Acquired Company treats, or had treated, as an independent contractor
satisfies, or satisfied, the requirement under Applicable Law for treatment
as an independent contractor.
(e) The Acquired Company has conducted its business so as to comply in
all respects with all Applicable Laws relating to immigration,
naturalization and work permits, including the Immigration and Nationality
Act of 1952, as amended by the Immigration Reform and Control Act of 1986
and the regulations promulgated thereunder.
(f) No present or former employee of the Acquired Company has any
valid and enforceable claim under any Applicable Law, any employment
agreement or otherwise, on account of or for (a) overtime pay, other than
overtime pay for the current payroll period, (b) wages or salary for any
period other than the current payroll period, (c) vacation or time off (or
pay in lieu thereof), other than that earned in respect of the previous
twelve months, or (d) any violation of any statute, ordinance or regulation
relating to minimum wages or maximum hours of work.
(g) There has not been filed with any state or federal court or
Regulatory Authority any claim, action or proceeding against the Acquired
Company arising out of any breach or violation by the Acquired Company of
any Applicable Laws relating to discrimination in employment or employment
practices or occupational safety and health standards.
3.19 Benefit Plans.
-------------
(a) Exhibit 3.19 lists every pension, retirement, profit-sharing,
-------------
deferred compensation, stock option, employee stock ownership, severance
pay, vacation, sick leave, leave without compensation, bonus or other
incentive plan, any medical, vision, dental or other health plan, any life
insurance plan or any other employee benefit plan or fringe benefit plan,
any other written or unwritten employee program, arrangement, agreement or
understanding, commitments or methods of contribution or compensation
(whether arrived at through collective bargaining or otherwise), whether
formal or informal, whether funded or unfunded, and whether legally binding
or not, including, without limitation, any "employee benefit plan," as that
term is defined in Section 3(3) of ERISA, which is currently or previously
adopted, maintained, sponsored in whole or in part, or contributed to by
the Acquired Company or any ERISA Affiliate of the Acquired Company, for
the benefit of, providing any remuneration or benefits to, or covering any
current or former employee, retiree, dependent, spouse or other family
member or beneficiary of such employee or retiree, director, independent
contractor, shareholder, officer or consultant or other beneficiary of the
Acquired Company or any ERISA Affiliate of the Acquired Company or under
(or in connection with) which the Acquired Company or an ERISA Affiliate of
the Acquired Company has any contingent or noncontingent liability of any
kind whether or not probable of assertion (collectively, the "Benefit
Plans"). Any of the Benefit Plans which is an "employee pension benefit
plan," as that term is defined in Section 3(2) of ERISA, or an "employee
welfare benefit plan" as that term is defined in Section 3(1) of ERISA, is
referred to herein as an "ERISA Plan."
13
(b) Exhibit 3.19 also lists, with respect to all Benefit Plans listed
------------
in Exhibit 3.19: (a) all trust agreements or other funding arrangements,
------------
including insurance contracts, all annuity contracts, financial
contributions, actuarial statements or valuations, fidelity bonds,
fiduciary liability policies, investment manager or advisory contracts,
corporate resolutions of memoranda, administrative committee minutes or
memoranda or records, and all amendments (if any) thereto, (b) where
applicable, with respect to any such plans or plan amendments, the most
recent determination letters issued by the IRS, (c) all communications or
other correspondence issued within the last six (6) years by any Regulatory
Authority, including without limitation, the IRS, DOL and the PBGC with
respect to such Benefit Plan, (d) annual reports or returns and audited or
unaudited financial statements for the most recent three plan years and any
amendments thereto, and (e) the most recent summary plan descriptions, any
material modifications thereto, and all material employee communications
with respect to such Benefit Plans. Contemporaneous with the delivery of
the Exhibits, the Acquired Company has delivered a true and complete copy
of all such Benefit Plans, agreements, letters, rulings, opinions, letters,
reports, returns, financial statements and summary plan descriptions
described in Sections 3.19(a) or 3.19(b) hereof, certified as such by a
duly authorized officer of the Acquired Company.
(c) All the Benefit Plans and any related trusts subject to ERISA
comply with and have been administered in compliance with the provisions of
ERISA, all applicable provisions of the Code relating to qualification and
tax exemption under Code Sections 401(a) and 501(a) or otherwise necessary
to secure intended tax consequences, all applicable state or federal
securities laws and all other applicable laws, rules and regulations and
collective bargaining agreements, and the Acquired Company has not received
any notice from any Regulatory Authority or instrumentality questioning or
challenging such compliance. All available governmental approvals for the
Benefit Plans have been obtained, including, but not limited to, timely
determination letters on the qualification of the ERISA Plans and tax
exemption of, related trusts, as applicable, under the Code and timely
registration and disclosure under applicable securities laws, and all such
governmental approvals continue in full force and effect. No event has
occurred that will or could give rise to disqualification of any such
Benefit Plan under Sections 401(a) or 501(a) of the Code or to a tax under
Section 511 of the Code.
(d) Neither the Acquired Company nor any administrator or fiduciary of
any such Benefit Plan (or agent or delegate of any of the foregoing) has
engaged in any transaction or acted or failed to act in any manner that
could subject the Acquired Company to any direct or indirect liability (by
indemnity or otherwise) for a breach of any fiduciary, co-fiduciary or
other duty under ERISA. No oral or written representation or communication
with respect to any aspect of the Benefit Plans has been or will be made to
employees of the Acquired Company prior to the Closing Date that is not in
accordance with the written or otherwise preexisting terms and provisions
of such Benefit Plans in effect immediately prior to the Closing Date,
except for any amendments or terminations required by the terms of this
Agreement. There are no unresolved claims or disputes under the terms of,
or in connection with, the Benefit Plans and no action, legal or otherwise,
has been commenced with respect to any claim.
(e) All annual reports or returns, audited or unaudited financial
statements, actuarial valuations, summary annual reports and summary plan
descriptions issued with respect to the Benefit Plans are correct and
accurate as of the dates thereof; and there have been no amendments filed
to any of such reports, returns, statements, valuations or descriptions or
required to make the information therein true and accurate.
14
(f) Neither the Acquired Company nor any other "party in interest" (as
defined in Section 3(14) of ERISA) or "disqualified person" (as defined in
Section 4975(e)(2) of the Code) of any Benefit Plan has engaged in any
"prohibited transaction" (within the meaning of Sections 503(b) or 4975(c)
of the Code or Section 406 of ERISA) with respect to such Benefit Plan, for
which there is no statutory, regulatory or individual or class exemption.
There has been no (a) "reportable event" (as defined in Section 4043 of
ERISA), or event described in Section 4062(f) or Section 4063(a) of ERISA
or (b) termination or partial termination, withdrawal or partial withdrawal
with respect to any of the ERISA Plans that the Acquired Company or any
ERISA Affiliate of the Acquired Company maintains or contributes to or has
maintained or contributed to or was required to maintain or contribute to
for the benefit of employees of the Acquired Company or any ERISA Affiliate
of the Acquired Company now or formerly in existence.
(g) For any ERISA Plan that is an employee pension benefit plan as
defined in ERISA Section 3(2), the fair market value of such Benefit Plan's
assets equals or exceeds the present value of all benefits (whether vested
or not) accrued to date by all participants in such Benefit Plan. For this
purpose the assumptions prescribed by the Pension Benefit Guaranty
Corporation for valuing plan assets or liabilities upon plan termination
shall be applied and the term "benefits" shall include the value of any
early retirement or ancillary benefits (including shutdown benefits)
provided under any Benefit Plan. As of the Closing Date, full payment will
have been made of all amounts which the Acquired Company is required to
have made at or prior to such time, under any Applicable Laws, as a
contribution to any Benefit Plan of the Acquired Company or of an ERISA
Affiliate of the Acquired Company, and no accumulated funding deficiency
(as defined in ERISA Section 302 or Code Section 412), whether or not
waived, will exist with respect to any Benefit Plan.
(h) Except as described on Exhibit 3.19 as of the Closing Date, the
-------------
Acquired Company will have no current or future liability with respect to
any events or matters occurring, arising or accruing on or prior to such
date under any Benefit Plan that was not reflected in the Interim Financial
Statements or that represents contributions required to be made under
written terms of such Benefit Plan as of the Closing Date.
(i) The Acquired Company does not maintain any Benefit Plan providing
deferred or stock based compensation which is not reflected in the Interim
Financial Statements.
(j) Neither the Acquired Company nor any ERISA Affiliate of the
Acquired Company has maintained, and neither now maintains, a Benefit Plan
providing welfare benefits (as defined in ERISA Section 3(1)) to employees
after retirement or other separation of service except to the extent
required under Part 6 of Title I of ERISA and Code Section 4980B.
(k) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee (or any
spouse, dependent or other family member of such employee) of the Acquired
Company or any ERISA Affiliate of the Acquired Company to severance pay,
unemployment compensation or any payment contingent upon a change in
control or ownership of the Acquired Company, or (ii) accelerate the time
of payment or vesting, or increase the amount, of any compensation due to
any such employee or former employee (or any spouse, dependent or other
family member of such employee).
15
(l) All Benefit Plans subject to Section 4980B of the Code, as amended
from time to time, or Part 6 of Title I of ERISA or both have been
maintained in good faith compliance with the requirements of such laws and
any regulations (proposed or otherwise) issued thereunder.
(m) No liability to the PBGC has been incurred as of the Closing Date
by the Acquired Company or any ERISA Affiliate of the Acquired Company,
except for PBGC insurance premiums, and all such insurance premiums
incurred or accrued up to and including the Closing Date have been timely
paid.
(n) Neither the Acquired Company or any ERISA Affiliate of the
Acquired Company maintains or has maintained, has contributed to or has
been required to contribute to, a multi-employer plan (as defined in
Section 3(37) of ERISA). No amount is due or owing from the Acquired
Company on account of a multi-employer plan (as defined in Section 3(37) of
ERISA) on account of any withdrawal therefrom.
(o) All annual reports (as described in Section 103 of ERISA) and all
Forms 5500 relating to the applicable provisions of the Code required to be
filed in connection with one or more of the Benefit Plans have been timely
and properly filed in accordance with applicable law.
3.20 Environmental Matters. No real property now or previously owned or
----------------------
used by the Acquired Company or now or previously owned or leased by the
Acquired Company (the "Real Property") has been used by the Acquired Company or
any other party for the handling, treatment, storage or disposal of any
Hazardous Substance. No release, discharge, spillage or disposal into the
environment of any Hazardous Substance and no soil, water or air contamination
by any Hazardous Substance has occurred or is occurring in, from or on the Real
Property. The Acquired Company has obtained all Permits which are required to be
obtained by the Acquired Company under Applicable Laws relating to protection of
the environment and has complied with all reporting requirements under any such
Applicable Laws and Permits with respect to the Real Property. There are no
claims, actions, suits, proceedings or investigations related to the presence,
release, production, handling, discharge, spillage, transportation or disposal
of any Hazardous Substance or ambient air conditions or contamination of soil,
water or air by any Hazardous Substance pending or threatened with respect to
the Real Property or otherwise against the Acquired Company in any court or
before any Regulatory Authority or private arbitration tribunal and there is no
basis for any such claim, action, suit, proceeding or investigation with respect
to the Real Property or otherwise against the Acquired Company. There are no
underground storage tanks on the Real Property. No building or other improvement
included in the Real Property contains any asbestos or any asbestos-containing
materials, and such buildings and improvements are free from radon
contamination. For the purposes of this Agreement, "Hazardous Substance" shall
mean any hazardous or toxic substance or waste as those terms are defined by any
Applicable Laws and petroleum, petroleum products and oil.
16
3.21 Insurance. Set forth in Exhibit 3.21 is a complete and accurate list
--------- ------------
and description of all insurance policies which the Acquired Company has
maintained with respect to its businesses, properties or employees within the
preceding thirty-six (36) months. Except as set forth in Exhibit 3.21, such
-------------
policies are in full force and effect and no event has occurred that would give
any insurance carrier a right to cancel or terminate any such policy. To the
best of the Acquired Company's and the Shareholders' knowledge, such policies
are reasonably adequate to insure fully against risks to which the Acquired
Company and its properties and assets are exposed in the operation of its
business in such amounts and types of coverage as are commercially reasonable
and are consistent with practices in the industry in which the Acquired Company
operates. The Acquired Company has not received notice of any pending or
threatened cancellation or premium increase (retroactive or otherwise) with
respect to any aforementioned policies and the Acquired Company is in compliance
with all conditions contained therein. Exhibit 3.21 contains a true, correct and
------------
complete list of all pending claims by the Acquired Company (and all facts and
circumstances known to the Acquired Company or the Shareholders which may give
rise to any claim) under such insurance for an amount in excess of $10,000 in
respect of any one claim. There are no pending claims against such insurance by
the Acquired Company as to which insurers are defending under reservation of
rights or have denied liability, and there exists no claim under such insurance
that has not been properly filed by the Acquired Company. The Acquired Company
has provided Purchaser with a true, correct and complete copy of all insurance
policies presently in effect with respect to the properties, assets and
businesses of the Acquired Company, including a statement identifying the
expiration date of each such policy. Except as set forth in Exhibit 3.21, since
------------
the date of the Interim Financial Statements, there has not been any change in
the Acquired Company's relationship with its insurers or in the premiums payable
pursuant to such policies.
3.22 Related Party Relationships. Except as set forth in Exhibit 3.22, no
---------------------------- ------------
shareholder of the Acquired Company, no affiliate or member of the immediate
family of any such shareholder, and no officer or director or member of the
immediate family of such officer or director of the Acquired Company possesses,
directly or indirectly, any beneficial interest in, or is a director, officer or
employee of, or member of the immediate family of a director, officer or
employee of, any corporation, partnership, firm, association or business
organization that is a client, supplier, customer, lessor, lessee, lender,
creditor, borrower, debtor or contracting party with or of the Acquired Company
(except as a stockholder holding less than a one percent (1%) interest in a
corporation whose shares are traded on a national or regional securities
exchange or in the over-the-counter market).
3.23 Questionable Payments. Neither the Acquired Company, any director,
----------------------
officer, agent, employee, nor other Person associated with or acting on behalf
of such entities or individuals has, directly or indirectly: (i) used any
corporate funds for unlawful contributions, gifts, entertainment, or other
unlawful payments to foreign or domestic governmental officials or employees or
to foreign or domestic political parties or campaigns from corporate funds; (ii)
violated any provision of the Foreign Corrupt Practices Act of 1977; (iii)
established or maintained any unlawful or unrecorded fund of corporate monies or
other assets; (iv) made any false or fictitious entry on the books or records of
the Acquired Company; (v) made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment; (vi) given any favor or gift which is not
deductible for federal income tax purposes; and/or (vii) made any bribe,
kickback, or other payment of a similar or comparable nature, that is unlawful,
to any person or entity, private or public, regardless of form, whether in
money, property, or services, to obtain favorable treatment in securing business
or to obtain special concessions, or to pay for favorable treatment for business
secured or for special concessions already obtained.
17
3.24 Bank Accounts; Power of Attorney.
--------------------------------
(a) Exhibit 3.24 lists the names and address of every bank and other
-------------
financial institution in which the Acquired Company maintains an account
(whether checking, savings or otherwise), lock box or safe deposit box, and
the account numbers and names of Persons having signing authority or other
access thereof.
(b) Exhibit 3.24 also lists the powers of attorney of the Acquired
-------------
Company and all Persons authorized to act with respect thereto.
3.25 Exhibits. All Exhibits attached hereto are true, correct and
--------
complete. Matters disclosed on each Exhibit shall be deemed disclosed only
for purposes of the matters to be disclosed on such Exhibit and shall not
be deemed to be disclosed for any other purpose unless expressly provided
therein.
3.26 Accuracy of Warranties. No representation, warranty, or statement
-----------------------
contained in this Agreement or in any certificate, schedule, list, exhibit or
other instrument furnished or to be furnished to Purchaser pursuant to the
provisions hereof contains or will contain any untrue statement of any material
fact.
IV. INVESTMENT REPRESENTATIONS OF EACH SHAREHOLDER AND RELATED MATTERS.
-----------------------------------------------------------------------
Each Shareholder hereby represents, warrants and covenants to Purchaser as
follows:
4.1 Investment Representations.
--------------------------
(a) Each Shareholder hereby confirms that the ABG Common Stock to be
received by it will be acquired for investment for its own account, not as
a nominee or agent, and not with a view to the sale or distribution or
public offering of any part thereof within the meaning of the Securities
Act of 1933 or the securities or blue sky laws of any state, and that it
has no present intention of selling, granting, participating in, or
otherwise distributing the same. By executing this Agreement, each
Shareholder further represents that it does not have any contract,
undertaking, agreement, or arrangement with any Person to sell, transfer or
grant participation to such Person, or to any third person, with respect to
any of the ABG Common Stock.
(b) Each Shareholder is an "accredited investor," is experienced in
evaluating companies such as Purchaser, is able to fend for itself in the
transactions contemplated by this Agreement, has such knowledge and
experience in financial and business matters as to be capable of evaluating
the merits and risks of its investment, and has the ability to bear the
economic risks of its investment and hold the ABG Common Stock for a
substantial period of time. Each Shareholder has had access, during the
course of the negotiation of the transactions contemplated hereby and prior
to its receipt of ABG Common Stock, to all such information as it deemed
necessary or appropriate and that it has had, during the course of the
negotiation of the transactions contemplated hereby and prior to its
receipt of ABG Common Stock, the opportunity to ask questions of, and
receive answers from, Purchaser concerning the terms and conditions of this
offering and to obtain additional information necessary to verify the
accuracy of any information furnished to it or to which it had access.
18
4.2 Evidence of Compliance with Private Offering Exception. Each
--------------------------------------------------------------
Shareholder agrees to provide such other reasonable evidence as counsel for
Purchaser may request in order to evidence the private offering nature of the
distribution of the ABG Common Stock received pursuant to this Agreement.
4.3 Restrictions on Disposition of Shares. The shares of the ABG Common
---------------------------------------
Stock to be issued to the Shareholders in connection with the transactions
contemplated by this Agreement will not have been registered under the
Securities Act of 1933 or any applicable securities or blue sky laws of any
state, and may be resold by a Shareholder only after registration under the
Securities Act of 1933 and any applicable securities or blue sky laws of any
state, or under an available exemption. The certificates for the ABG Common
Stock shall bear an appropriate legend noting that the shares represented by
each certificate have not been registered under the Securities Act of 1933 or
any applicable securities or blue sky laws of any state, and as such are subject
to restrictions on resale. Each Shareholder agrees that the ABG Common Stock
will not be disposed of except (i) pursuant to an effective registration
statement under the Securities Act of 1933 and any applicable securities or blue
sky laws of any state, or (ii) in any other transaction which is exempt from
registration under the Securities Act of 1933 or the rules and regulations of
the SEC promulgated thereunder and any applicable securities or blue sky laws of
any state. Each Shareholder further agrees (i) that no such sale, conveyance or
disposition of the ABG Common Stock shall occur for a period of twelve months
after Closing, (ii) that no more than one-third of the ABG Common Stock shall be
sold during the period between the first anniversary and the second anniversary
of Closing, (iii) that no more than one-third of the ABG Common Stock shall be
sold during the period between the second anniversary and the third anniversary
of Closing, and (iv) that no more than one-third of the ABG Common Stock shall
be sold during the period between the third anniversary and the fourth
anniversary of Closing. In order to effectuate the covenants of this subsection,
an appropriate legend will be placed upon each of the certificates for the ABG
Common Stock, and stop transfer instructions shall be placed with the transfer
agent for such shares. Such legend shall be removed from the respective
certificates as appropriate upon reaching the respective anniversary date that
terminates the restriction.
4.4 Extension of Lease. The Shareholders agree that prior to and/or after
------------------
the Closing they shall, on behalf of Purchaser, negotiate with the landlord to
obtain a favorable extension to the existing real property lease on the real
property utilized by the Acquired Company, which extension is intended to ensure
that the real property lease has a minimum of three years remaining on the
original lease with renewal options which may extend the terms of such lease for
up to at least ten additional years.
V. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
-----------------------------------------------
19
Purchaser represents and warrants to the Acquired Company and the
Shareholders as follows:
5.1 Organization and Standing. Purchaser is a duly organized and validly
--------------------------
existing corporation in good standing under the laws of the State of Delaware.
5.2 Corporate Power and Authority.
-----------------------------
(a) Purchaser has the capacity and authority to execute and deliver
this Agreement, to perform hereunder and to consummate the transactions
contemplated hereby without the necessity of any act or consent of any
other Person.
(b) The execution, delivery and performance by Purchaser of this
Agreement and each and every agreement, document and instrument provided
for herein have been duly authorized and approved by its Board of
Directors.
(c) This Agreement, and each and every other agreement, document and
instrument to be executed, delivered and performed by Purchaser in
connection herewith, constitute or will, when executed and delivered,
constitute the valid and legally binding obligations of Purchaser,
enforceable against it in accordance with their respective terms.
5.3 Agreement Does Not Violate Other Instruments. Except as set forth on
----------------------------------------------
Exhibit 5.3, the execution and delivery by Purchaser of this Agreement and the
-----------
other agreements and instruments to be executed and delivered in connection with
the transactions contemplated hereby or thereby do not, and, the consummation of
the transactions contemplated hereby will not, violate or conflict with (i) any
provisions of the Certificate of Incorporation, as amended, or Bylaws, as
amended, of Purchaser, (ii) any Applicable Laws to which Purchaser is subject;
(iii) any judgment, ruling, order, writ, injunction or decree of any court or of
any Regulatory Authority to which Purchaser is a party or bound or by which any
of its assets are affected; (iv) or constitute an occurrence of default under
any provision of, or result in acceleration of any obligation under, or give
rise to a contractual right by any party to terminate its obligations under, any
mortgage, deed of trust, conveyance to secure debt, note, bond, loan, lien,
lease, agreement, instrument, or other Contract to which Purchaser is a party or
is bound or by which any of its assets are affected.
5.4 Required Governmental Consents. No consent, approval, order,
----------------------------------
certification, permission or authorization of, notice to, exemption by, or
registration, declaration, recording or filing with, any Regulatory Authority is
required to be obtained or made by or with respect to Purchaser or any assets,
properties or operations of Purchaser in connection with the execution and
delivery by Purchaser of this Agreement or the consummation of the transactions
contemplated hereby.
20
5.5 ABG Common Stock. The issuance and delivery by Purchaser of shares of
-----------------
the ABG Common Stock in connection with the transactions contemplated by this
Agreement will be, as of the Closing Date, duly authorized by all necessary
corporate action on the part of Purchaser. The shares of ABG Common Stock to be
issued pursuant to this Agreement, when issued in accordance with the terms of
this Agreement, will be validly issued, fully paid and nonassessable.
VI. COVENANTS AND AGREEMENTS OF THE ACQUIRED COMPANY AND THE SHAREHOLDERS.
-----------------------------------------------------------------------
6.1 Acquired Company Actions. The Acquired Company and the Shareholders
--------------------------
hereby consent to the transaction contemplated hereby and represent that the
Board of Directors of the Acquired Company, by unanimous vote of all directors
present at a meeting duly called and held, has (a) determined that the
transaction contemplated hereby is fair to the shareholders of the Acquired
Company and is in the best interests of the shareholders of the Acquired Company
and (b) resolved to recommend approval of the transaction contemplated hereby to
the shareholders of the Acquired Company.
6.2 Conduct of Business - Negative Covenants. From the date of this
---------------------------------------------
Agreement until the earlier of the Closing Date or until the termination of this
Agreement, the Acquired Company and the Shareholders covenant and agree that the
Acquired Company shall, and the Shareholders shall cause the Acquired Company
to, carry on its business in the ordinary course and maintain and preserve its
organization, goodwill and properties and not take any action inconsistent
therewith or with the consummation of the transactions contemplated by this
Agreement. In this connection, the Acquired Company will not, and the
Shareholders shall cause the Acquired Company not to, do or agree or commit to
do, any of the following without the prior written consent of Purchaser:
(a) amend its articles of incorporation or bylaws;
(b) repurchase, redeem, or otherwise acquire or exchange, directly or
indirectly, any shares of its capital stock or any securities convertible
into any shares of its capital stock;
(c) declare or pay any dividend whether in cash, stock or otherwise or
make or agree to make any other distribution to its shareholders other than
any ordinary distributions made to the Shareholders due to the Acquired
Corporation's status as an S corporation;
(d) organize any subsidiary, acquire any capital stock or other equity
securities of any corporation, or acquire any equity or ownership interest
in any business;
(e) mortgage, pledge, or otherwise encumber or dispose of any of its
assets other than in the ordinary course of business;
(f) incur any additional indebtedness except in the ordinary course of
business;
21
(g) grant any general increase in compensation to its employees as a
class or to its officers, except in accordance with past practice; pay any
bonus; grant any increase in fees or other increases in compensation or
other benefits to any of its directors; or effect any change in retirement
benefits for any class of its employees or officers;
(h) amend any existing employment Contract between the Acquired
Company and any individual to increase the compensation or benefits payable
thereunder or enter into any new employment Contract with any Person;
(i) adopt any new employee benefit plan or make any change in or to
any existing Benefit Plans;
(j) (i) utilize accounting principles different from those used in the
preparation of the 1996 and 1997 Financial Statements, (ii) change in any
manner its method of maintaining its books of account and records from such
methods as in effect on December 31, 1997, or (iii) accelerate booking of
revenues or the deferral of expenses, other than as shall be consistent
with past practice and in the ordinary course of business;
(k) suffer, permit or incur any of the transactions or events
described in Section 3.12 hereof, or, other than as shall be consistent
with past practice and in the ordinary course of business, enter into any
contract, commitment, arrangement or transaction of the type described in
Section 3.16 hereof;
(l) engage in any transaction or event which could adversely effect
the value of the Acquired Company's business;
(m) grant or agree to grant any stock option, warrant or other right
to purchase any security of the Acquired Company or issue any security
convertible into such securities;
(n) make any contribution to or distribution from any employee benefit
plan, pension plan, stock bonus plan, 401(k) plan or profit sharing plan
(except for the payment of any health, disability and life insurance
premiums which may become due and except for contributions or distributions
required to be made (and not discretionary) pursuant to the terms of any
Benefit Plans); or
(o) make any change in its banking or safe deposit arrangements or
grant any powers of attorney.
6.3 Conduct of Business -- Affirmative Covenants. Unless the prior written
--------------------------------------------
consent of Purchaser shall have been obtained and except as otherwise
contemplated herein, the Acquired Company will, and the Shareholders shall cause
the Acquired Company to: (a) operate its business only in the usual, regular and
ordinary course; (b) use its best efforts to preserve intact its business
organization and assets and maintain its rights and franchises; (c) keep in
force at no less than their present limits all existing bonds and policies of
insurance or comparable replacements thereof insuring the Acquired Company and
its properties; (d) promptly advise Purchaser in writing of (i) any matters
arising or discovered after the date of this Agreement which, if existing or
known at the date hereof, would be required to be set forth or described in this
Agreement, or, (ii) the institution or the threat of any litigation involving
the Acquired Company; (e) take no action which would (i) adversely affect the
ability of it to obtain any necessary approvals of any Regulatory Authority
required for the transactions contemplated hereby, or (ii) adversely affect the
ability of the Acquired Company to perform its covenants and agreements under
this Agreement; and (f) comply with all Applicable Laws.
22
6.4 Adverse Changes in Condition. The Acquired Company and the Shareholders
----------------------------
shall give written notice promptly to Purchaser concerning any material adverse
change in the business, properties, rights, operations or financial condition of
the Acquired Company from the date of this Agreement until the Closing Date. The
Acquired Company and the Shareholders shall use their best efforts to prevent or
promptly remedy the same.
6.5 Resignation. The Acquired Company and the Shareholders shall deliver at
-----------
the Closing the resignation of each of the directors and officers of the
Acquired Company and each trustee under any Benefit Plan maintained by the
Acquired Company, such resignations to be effective immediately prior to the
Closing Date.
6.6 Examination of Property and Records; Additional Information. Between
-------------------------------------------------------------
the date of this Agreement and the Closing Date, the Acquired Company and the
Shareholders will allow Purchaser, its counsel and other representatives full
access to all the books, records, files, documents, assets, properties,
contracts and agreements of the Acquired Company which may be requested, and the
Acquired Company and the Shareholders shall furnish Purchaser, its officers and
representatives during such period with all information concerning the affairs
of the Acquired Company which may be requested. The Acquired Company and the
Shareholders shall also make available to Purchaser the opportunity to discuss
the affairs of the Acquired Company with the Acquired Company's management,
employees, financial personnel, independent public accountants and legal
counsel. Each Shareholder shall cooperate in all reasonable respects with
Purchaser's examinations and investigations.
6.7 Agreement as to Efforts to Consummate; Consents and Approvals. Subject
--------------------------------------------------------------
to the terms and conditions of this Agreement, the Acquired Company and the
Shareholders shall use all reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under Applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement. Unless specifically waived by Purchaser in writing, the Acquired
Company and the Shareholders shall obtain the waiver, consent and approval of
all Persons whose waiver, consent or approval (a) is required in order to
consummate the transactions contemplated by this Agreement or (b) is required by
any Contract or Applicable Laws and (i) which would prohibit or require the
waiver, consent or approval of any Person to such transactions or (ii) under
which, without such waiver, consent or approval, such transactions would
constitute an occurrence of default under the provisions thereof, result in the
acceleration of any obligation thereunder or give rise to a right of any party
thereto to terminate its obligations thereunder. Notwithstanding the foregoing,
to the extent that such a waiver, consent or approval cannot be obtained without
substantial expense or difficulty, the Acquired Company and the Shareholders
shall confer with Purchaser before proceeding to obtain such waiver, consent or
approval and Purchaser, in its sole discretion, may waive in writing the
requirement of obtaining such waiver, consent or approval.
23
6.8 Contact with Third Parties. The Acquired Company and the Shareholders
--------------------------
recognize that Purchaser and its authorized representatives may have need to
contact customers, employees, accountants, governmental bodies and other Persons
having a present business or other relationship with the Acquired Company in
connection with the investigation of the Acquired Company. The Acquired Company
and the Shareholders consent to such contact and waive any rights they may have
to inhibit or prevent such contact to the extent such contact relates to the
investigation of the Acquired Company.
6.9 Supplying of Financial Statements. The Acquired Company and the
------------------------------------
Shareholders shall deliver to Purchaser all regularly prepared audited and
unaudited financial statements of the Acquired Company prepared after the date
of this Agreement, in format historically published or utilized internally (as
applicable), as soon as each is available.
6.10 No Solicitation. Neither the Shareholders nor the Acquired Company
----------------
will conduct any negotiations with anyone other than Purchaser (except if
Purchaser notifies the Acquired Company in writing that it is no longer
interested in pursuing the transaction contemplated by this Agreement) with
respect to the merger, consolidation or purchase of the Acquired Company (or a
significant portion of the Acquired Company's assets), nor will the Acquired
Company or any of the Shareholders provide anyone potentially interested in
conducting such negotiations with any information concerning the Acquired
Company.
VII. ADDITIONAL AGREEMENTS
----------------------
7.1 Cooperation. Subject to the terms and conditions of this Agreement, the
-----------
parties hereto shall use all reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper, or
advisable under Applicable Laws, including all relevant securities laws, to
consummate and make effective, as soon as practicable after the date of this
Agreement, the transactions contemplated by this Agreement. The parties hereto
shall use their best efforts to obtain consents of any Regulatory Authority and
other third parties or governmental bodies necessary or desirable for the
consummation of the transactions contemplated by this Agreement. Each party
hereto shall cooperate with the others, and execute and deliver, or cause to be
executed and delivered, all such additional instruments, including instruments
of conveyance, assignment and transfer and take all such other actions as may
reasonably be requested from time to time in order to effectuate the provisions
and purposes of this Agreement or to ensure that each party hereto receives the
full benefit of the transactions contemplated by this Agreement. Each party
hereto shall endeavor in good faith and cooperate one with the other to complete
the Exhibits called for by this Agreement.
7.2 Non-Disclosure. Prior to the Closing, all general notices, releases,
--------------
statements and communications to employees, suppliers, distributors and
customers of the Acquired Company and to the general public and the press
relating to the transactions contemplated by this Agreement shall be made only
at such times and in such manner as may be mutually agreed upon in writing by
Purchaser, the Acquired Company and the Shareholders; provided, however, that
any party shall be entitled to make a public announcement of the proposed
transaction at any time if, in the written opinion of its legal counsel, such
announcement is required to comply with any Applicable Laws.
24
7.3 Brokers and Finders. Purchaser represents and warrants to the Acquired
-------------------
Company and the Shareholders, and the Acquired Company and the Shareholders,
jointly and severally, represent and warrant to Purchaser, that no broker or
finder has acted for it or them or any entity controlling, controlled by or
under common control with it or them in connection with this Agreement.
Purchaser agrees to indemnify and hold harmless the Acquired Company and the
Shareholders against any fee, loss or expense arising out of any claim by any
broker or finder employed or alleged to have been employed by it, and the
Acquired Company and the Shareholders, jointly and severally, agree to indemnify
and hold harmless Purchaser against any fee, loss, or expense arising out of any
claim by any broker or finder employed or alleged to have been employed by them.
This indemnification shall be separate and apart from any other indemnification
provided in this Agreement and is not subject to, and is not to be included, in
any limits on indemnification contained elsewhere in this Agreement.
7.4 Confidentiality.
---------------
(a) Each party to this Agreement acknowledges that from the date of
this Agreement until Closing such party may receive confidential and
proprietary information from one or more other parties to this Agreement.
Such information, whether written or oral, includes, but is not limited to,
financial, technical, permitting, operating, marketing and other
information, as well as information pertaining to geographical areas and
fields of business interests, identities and information about employees,
consultants, vendors, suppliers, customers, and other business contacts,
methods of doing business and other trade secrets (the "Confidential
Information"). The Acquired Company and the Shareholders agree to keep all
such Confidential Information of Purchaser secret and to maintain the
confidentiality of such information indefinitely and Purchaser agrees to
keep all such Confidential Information of the Acquired Company and the
Shareholders secret and to maintain the confidentiality of such information
until the Closing, or in the event the Closing does not occur indefinitely;
provided, however, that the following shall be deemed not to be
Confidential Information: (1) information lawfully obtained by a party from
a third party who is not under an obligation of confidentiality with
respect to such information; (2) information which is in the public domain;
(3) information which a party can prove was independently developed by such
party without the use of information which would otherwise be Confidential
Information; and (4) information which the party is ordered to disclose by
any court or governmental agency (provided that the party gives the other
parties hereto written notice of any such judicial or administrative
proceeding as soon as practical after the party learns of such proceeding).
(b) The Confidential Information shall be used solely for the purpose
of evaluating the possible transactions contemplated by this Agreement and
shall not be used in any way directly or indirectly detrimental to any
party hereto. Such Confidential Information may be disclosed to advisers of
the parties hereto as necessary for the sole purpose of evaluating the
proposed transactions contemplated by this Agreement. All persons to whom
such Confidential Information is disclosed shall be informed of the
confidential nature of such information and shall likewise agree to be
bound by the terms of this confidentiality provision. Each party hereto
agrees and recognizes that such party will be liable to the other parties
hereto for any breach of this confidentiality provision by such party or
any of its representatives.
25
(c) Upon written request of any party hereto, or upon the termination
of this Agreement, each party hereto shall promptly return to the other
parties any Confidential Information obtained and shall destroy all
originals and copies of any notes, analyses, compilations, studies,
interpretations or other materials prepared containing or reflecting any
Confidential Information.
VIII. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.
-----------------------------------------------------
All of the obligations of Purchaser to consummate the transaction
contemplated by this Agreement shall be contingent upon and subject to the
satisfaction, on or before the Closing, of each and every one of the following
conditions. The following conditions are for the sole benefit of Purchaser and
may be asserted by Purchaser regardless of the circumstances giving rise to any
such condition and may be waived by Purchaser, in whole or in part, at any time
and from time to time, in the sole discretion of Purchaser. The failure by
Purchaser at any time including prior to Closing to exercise any of the
foregoing rights will not be deemed a waiver of any other right and each right
will be deemed an ongoing right which may be asserted at any time and from time
to time.
8.1 Representations and Warranties of Acquired Company and the
---------------------------------------------------------------------
Shareholders. The representations and warranties of the Acquired Company and the
Shareholders set forth in this Agreement shall be true and correct in all
respects as of the date of this Agreement and as of the Closing Date with the
same force and effect as though all such representations and warranties had been
made on and as of the Closing Date, except for any such representations and
warranties confined to a specified date, which shall be true and correct in all
respects as of such date.
8.2 Performance of Agreements and Covenants of Acquired Company and the
----------------------------------------------------------------------
Shareholders. Each and all of the covenants and agreements of the Acquired
------------
Company and the Shareholders to be performed and complied with pursuant to this
Agreement and the other agreements contemplated hereby prior to the Closing Date
shall have been duly performed and complied with in all respects; and a duly
authorized officer of the Acquired Company and each of the Shareholders shall
deliver a certificate dated as of the Closing Date certifying to the fulfillment
of this condition and the condition set forth under Section 8.1 above.
8.3 Corporate Authorization. All corporate action, including the approval
------------------------
of Purchaser's Board of Directors, necessary to authorize the execution,
delivery and performance of this Agreement, and the consummation of the
transactions contemplated hereby, shall have been duly and validly taken by
Purchaser and the Acquired Company.
8.4 Material Adverse Change. There shall have been no determination by
-------------------------
Purchaser that the consummation of the transaction contemplated by this
Agreement is not in the best interests of Purchaser or its shareholders by
reason of an actual or threatened material adverse change in the business,
properties, rights, operations, or financial condition of the Acquired Company.
8.5 Outstanding Stock of the Acquired Company. There shall not be more than
-----------------------------------------
10,000 shares of Common Stock of the Acquired Company outstanding at the Closing
Date.
26
8.6 Actions of Governmental Authorities; Banking Moratorium. There shall
------------------------------------- ------------------
not have been instituted or pending any action, proceeding, application, claim
or counterclaim by any Regulatory Authority, and neither Purchaser, the Acquired
Company nor any Shareholder shall have been notified by any such Regulatory
Authority (or a representative thereof) of its present intention to commence, or
recommend the commencement of, such an action or proceeding, which (a) restrains
or prohibits or seeks to restrain or prohibit the consummation of the
transaction contemplated by this Agreement or restrains or prohibits or seeks to
restrain or prohibit the performance of this Agreement, or (b) prohibits or
limits or seeks to prohibit or limit the ownership or operation by Purchaser of
all or any substantial portion of the business or assets of the Acquired Company
or of Purchaser or any of its subsidiaries or compels or seeks to compel
Purchaser to dispose of or to hold separate all or any substantial portion of
the business or assets of the Acquired Company or of Purchaser or any of its
subsidiaries, or imposes or seeks to impose any material limitation on the
ability of Purchaser to conduct such business or to own such assets. There shall
not be in effect a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not mandatory).
8.7 Other Legal Actions. There shall not have been any statute, rule,
---------------------
regulation, order or injunction enacted, promulgated, entered, enforced or
deemed applicable to this Agreement or the transactions contemplated by this
Agreement by any Regulatory Authority or court, domestic or foreign, and no
claim or action for such shall have been instituted before a court, or
Regulatory Authority, and such shall not have been proposed before a legislative
body or Regulatory Authority that could be reasonably expected to result in any
of the consequences referred to in clauses (a) or (b) of Section 8.6 above.
8.8 Legal Approvals. The execution and the delivery of this Agreement and
----------------
the consummation of the transactions contemplated hereby shall have been
approved by any Regulatory Authority whose approval is required by Applicable
Laws.
8.9 Due Diligence. Purchaser shall have completed its due diligence and
--------------
shall be satisfied with the results thereof in its sole discretion.
8.10 Covenants Not to Compete. Those Persons identified on Exhibit 8.10
------------------------ ------------
shall have entered into Covenants Not To Compete substantially in the form set
forth as Exhibit 8.10 hereto.
------------
8.11 Employment Agreements. Those Persons identified on Exhibit 8.11 shall
--------------------- ------------
have entered into employment agreements substantially in the form set forth as
Exhibit 8.11 hereto.
------------
8.12 Required Deliveries. The Acquired Company and the Shareholders shall
--------------------
have delivered, or caused to be delivered, to Purchaser the following:
(a) Resignations of each director and officer of the Acquired Company
and resignations of each trustee of each Benefit Plan as required by
Section 6.5;
27
(b) All share certificates for Common Stock of the Acquired Company
duly endorsed in blank for transfer (with signatures guaranteed and with
all necessary transfer taxes paid or other revenue stamps affixed thereto);
(c) A certificate of compliance or a certificate of good standing of
the Acquired Company, as of the most recent practicable date, from the
appropriate governmental authority of the jurisdiction of its incorporation
and any other jurisdiction which is set forth in Exhibit 3.1 hereto; and a
-----------
certificate of tax compliance as of the most recent practicable date, from
the appropriate governmental authority of the jurisdiction of its
incorporation;
(d) Certified copies of resolutions of the Board of Directors of the
Acquired Company approving the transactions set forth in this Agreement;
(e) Certificate of incumbency for the officers of the Acquired
Company;
(f) Satisfactory evidence of the approvals, consents and waivers
described in Sections 3.10 and 3.11;
(g) All other documents and information required to be delivered at
the Closing by the Acquired Company or the Shareholders hereunder; and
(h) Such other evidence of the performance of all covenants and
satisfaction of all conditions required of the Acquired Company and the
Shareholders by this Agreement, at or prior to the Closing, as Purchaser or
its counsel may reasonably require.
8.13 Indemnification Agreement. The Shareholders shall have entered
--------------------------
into an Indemnification Agreement substantially in the form set forth as Exhibit
-------
8.13 hereto.
----
IX. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE ACQUIRED COMPANY AND THE
------------------------------------------------------------------------
SHAREHOLDERS.
------------
All of the obligations of the Acquired Company and the Shareholders to
consummate the transaction contemplated by the Agreement shall be contingent
upon and subject to the satisfaction, on or before the Closing, of each and
every one of the following conditions. The following conditions are for the
sole benefit of the Acquired Company and the Shareholders and may be asserted by
the Acquired Company or the Shareholders regardless of the circumstances giving
rise to any such condition and may be waived by the Acquired Company or the
Shareholders, in whole or in part, at any time and from time to time, in the
sole discretion of the Acquired Company or the Shareholders for purposes of
consummating the transactions contemplated herein. The failure by the Acquired
Company or the Shareholders at any time to exercise any of the foregoing rights
will not be deemed a waiver of any other right and each right will be deemed an
ongoing right which may be asserted at any time and from time to time.
28
9.1 Representations and Warranties. The representations and warranties of
-------------------------------
Purchaser set forth in this Agreement shall be true and correct in all respects
as of the date of this Agreement and as of the Closing Date with the same force
and effect as though all such representations and warranties had been made on
and as of the Closing Date, except for any such representations and warranties
confined to a specified date, which shall be true and correct in all respects as
of such date.
9.2 Performance of Agreements and Covenants. Each and all of the covenants
---------------------------------------
and agreements of Purchaser to be performed and complied with pursuant to this
Agreement, and the other agreements contemplated hereby prior to the Closing
Date shall have been duly performed and complied with in all respects; and a
duly authorized officer of Purchaser shall deliver a certificate dated as of the
Closing Date certifying to the fulfillment of this condition and the condition
set forth under Section 9.1 above.
9.3 Corporate Authorization. All corporate action necessary to authorize
------------------------
the execution, delivery and performance of this Agreement, and the consummation
of the transactions contemplated hereby, shall have been duly and validly taken
by Purchaser.
9.4 Actions of Governmental Authorities. There shall not have been
--------------------------------------
instituted or pending any action, proceeding, application, claim or counterclaim
by any Regulatory Authority, and neither Purchaser, the Acquired Company nor any
Shareholder shall have been notified by any such Regulatory Authority (or a
representative thereof) of its present intention to commence, or recommend the
commencement of, such an action or proceeding, which restrains or prohibits or
seeks to restrain or prohibit the consummation of the transaction contemplated
hereby or restrains or prohibits or seeks to restrain or prohibit the
performance of this Agreement.
9.5 Other Legal Actions. There shall not have been any Applicable Laws
---------------------
enacted, promulgated, entered, enforced or deemed applicable to the transaction
contemplated hereby or this Agreement by any Regulatory Authority or court, and
no claim or action for such shall have been instituted before a court or
Regulatory Authority, and such shall not have been proposed before a legislative
body or Regulatory Authority that could be reasonably expected to result in any
of the consequences referred to in Section 9.4 above.
9.6 Legal Approvals. The execution and the delivery of this Agreement and
----------------
the consummation of the transactions contemplated hereby shall have been
approved by any Regulatory Authority whose approval is required by Applicable
Laws.
9.7 Required Deliveries. Purchaser shall have delivered to the Shareholders
-------------------
the following:
(a) the consideration for the purchase of all of the Common Stock of
the Acquired Company as specified in Section 2.2;
(b) Satisfactory evidence of the approvals described in Section 5.4;
(c) Certified copy of resolutions of the Board of Directors of
Purchaser approving the transaction contemplated by this Agreement;
29
(d) Certificate of incumbency of the officers of Purchaser who are
executing this Agreement and the other documents contemplated hereunder;
(e) All other documents and information required to be delivered at
the Closing by Purchaser; and
(f) Such other evidence of the performance of all the covenants and
satisfaction of all of the conditions required of Purchaser by this
Agreement at or before the Closing as the Shareholders or their counsel may
reasonably require.
X. CLOSING
-------
10.1 Time and Place of Closing. The Closing will take place at 10:00 a.m.
---------------------------
on October 30, 1998, or at such other time as the parties hereto may mutually
agree (the "Closing Date"). The Closing shall take place at the offices of
Purchaser or at such other place as the parties hereto may mutually agree.
XI. SURVIVAL (OR NON-SURVIVAL) OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
------------------------------------------------------------------------
INDEMNIFICATION.
---------------
11.1 Non-Survival of Representations, Warranties and Covenants of the
---------------------------------------------------------------------
Acquired Company. All representations, warranties, agreements, covenants and
----------------
obligations made or undertaken by the Acquired Company in this Agreement or in
any document or instrument executed and delivered pursuant hereto shall not
survive the Closing and, following the Closing, the Acquired Company shall have
no liability whatsoever with respect to any such representations, warranties,
agreements, covenants or obligations. Prior to Closing, the Acquired Company
agrees to indemnify and hold Purchaser harmless from and against all liability,
loss, damages or injury and all reasonable costs and expenses (including
reasonable counsel fees and costs of any suit related thereto) suffered or
incurred by Purchaser arising from breach of any representation, warranty or
covenant of the Acquired Company contained in this Agreement or any certificate
or other instrument furnished or to be furnished by the Acquired Company
hereunder, or any claim by a third party (regardless of whether the claimant is
ultimately successful) which if true would be such a misrepresentation or
breach.
11.2 Survival of Representations, Warranties and Covenants of the
-------------------------------------------------------------------
Shareholders; Indemnification by the Shareholders.
-------------------------------------------------
(a) All representations, warranties, agreements, covenants and
obligations made or undertaken by the Shareholders in this Agreement or in
any document or instrument executed and delivered pursuant hereto are
material, have been relied upon by Purchaser, shall survive the Closing
hereunder, and shall not merge in the performance of any obligation by any
party hereto.
30
(b) The Shareholders, jointly and severally, agree to indemnify and
hold Purchaser harmless from and against all liability, loss, damages or
injury and all reasonable costs and expenses (including reasonable counsel
fees and costs of any suit related thereto) suffered or incurred by
Purchaser arising from (i) breach of any representation, warranty,
agreement, covenant or obligation of, any Shareholder contained in this
Agreement or any certificate or other instrument furnished or to be
furnished by any Shareholder hereunder, or any claim by a third party
(regardless of whether the claimant is ultimately successful) which if true
would be such a breach; (ii) any suit, action, proceeding, claim or
investigation pending or threatened against or affecting the Acquired
Company that arises from any matter or state of facts existing at or prior
to Closing, regardless of whether it is disclosed; or (iii) any claim
against or liability of the Acquired Company, which accrued prior to the
Closing, to the extent not accrued or reserved against in the Interim
Financial Statements. In connection with this indemnification, the
Shareholders agree that they will not seek, and they will not have, any
right of reimbursement, indemnity, contribution or similar right against
the Acquired Company.
(c) Any examination, inspection or audit of the properties, financial
condition or other matters of the Acquired Company and its business
conducted by Purchaser through the Closing Date shall in no way limit,
affect or impair the ability of Purchaser to rely upon the representations,
warranties, covenants and obligations set forth herein.
11.3 Survival of Representations, Warranties and Covenants of Purchaser;
----------------------------------------------------------------------
Indemnification by Purchaser.
----------------------------
(a) All representations, warranties, agreements, covenants and
obligations made or undertaken by Purchaser in this Agreement or in any
document or instrument executed and delivered pursuant hereto are material,
have been relied upon by the Acquired Company and the Shareholders and
shall survive the Closing hereunder and shall not merge in the performance
of any obligation by any party hereto.
(b) Purchaser agrees to indemnify and hold the Acquired Company and
the Shareholders harmless from and against all liability, loss, damage or
injury and all reasonable costs and expenses (including reasonable counsel
fees and costs of any suit related thereto) suffered or incurred by the
Acquired Company or the Shareholders arising from breach of any
representation, warranty, agreement, covenant or obligation of Purchaser
contained in this Agreement or any certificate or other instrument
furnished or to be furnished by Purchaser hereunder, or any claim by a
third party (regardless of whether the claimant is ultimately successful)
which if true would be such a breach.
11.4 Limitations of Liability. The maximum amount that any party shall
------------------------
be obligated to pay hereunder in connection with one or more claims for
indemnification under this Agreement shall not exceed in the aggregate the total
amount of the purchase price as calculated under Section 2.2 hereof.
XII. TERMINATION.
-----------
12.1 Method of Termination. This Agreement constitutes the binding and
----------------------
irrevocable agreement of the parties to consummate the transactions contemplated
hereby, the consideration for which is (a) the covenants set forth herein, and
(b) expenditures and obligations incurred and to be incurred by Purchaser, on
the one hand, and by the Acquired Company and the Shareholders, on the other
hand, in respect of this Agreement, and this Agreement may be terminated or
abandoned only as set forth in Section 12.2.
31
12.2 Termination. This Agreement may be terminated at any time prior to the
-----------
Closing Date:
(a) by mutual written consent of the Acquired Company, and Purchaser,
properly authorized by their respective Boards of Directors;
(b) by Purchaser if, as set forth in Section 2.3, Purchaser shall for
any reason decide, in its sole discretion, that the transactions
contemplated by this Agreement are not suitable or in its best interest and
shall provide written notice to the Shareholders of its decision to
terminate this Agreement at any time prior to 5:00 p.m. (EDT) on October
16, 1998;
(c) by Purchaser or the Acquired Company, upon written notice to the
other, (i) if the Closing Date shall not have occurred within forty-five
(45) days from the date of this Agreement, unless the failure of such
occurrence shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe its agreements and conditions set
forth herein required to be performed or observed by such party at or
before the Closing Date; (ii) 90 days after the date on which any
application for regulatory approval prerequisite to the consummation of the
transactions contemplated hereby shall have been denied, or withdrawn at
the request or recommendation of the applicable Regulatory Authority,
unless within such 90-day period a petition for rehearing or an amended
application has been filed with such applicable Regulatory Authority or a
party hereto notifies the other party of its intent to file such a petition
or application within such 90-day period in which event the right to
terminate this Agreement shall be reinstated 60 days following the
completion or abandonment of all administrative, or judicial proceedings to
which any of the parties hereto is entitled; provided, however, that
nothing in this subparagraph (ii) shall be construed as limiting any
parties' right to terminate this Agreement in accordance with the
provisions of subparagraph (i) of this paragraph if the Closing Date shall
not have occurred within forty-five (45) days from the date of this
Agreement unless the failure of such occurrence shall be due to the failure
of the party seeking to terminate this Agreement to perform or observe its
agreements and conditions set forth herein required to be performed or
observed by such party at or before the Closing Date;
(d) by Purchaser, upon written notice to the Acquired Company, if
there shall have been any breach of any covenant, representation, warranty
or other obligation of the Acquired Company hereunder and such breach shall
not have been remedied within 30 days after receipt by the Acquired Company
of notice in writing from Purchaser, specifying the nature of such breach
and requesting that it be remedied;
(e) by the Acquired Company, upon written notice to Purchaser, if
there shall have been any breach of any covenant, representation, warranty
or other obligation of Purchaser hereunder and such breach shall not have
been remedied within 30 days after receipt by Purchaser of notice in
writing from the Acquired Company specifying the nature of such breach and
requesting that it be remedied; or
32
(f) by Purchaser, upon written notice to the Acquired Company, if
there shall have occurred any material adverse change in the business,
properties, rights, operations, or financial condition of the Acquired
Company and such material adverse change shall not have been remedied
within 30 days after receipt by the Acquired Company of notice in writing
from Purchaser specifying the nature of such material adverse change and
requesting that it be remedied.
12.3 Effect of Termination. In the event of a termination of this Agreement
---------------------
pursuant to Section 12.2(a) or (b) hereof, each party shall pay the costs and
expenses incurred by it in connection with this Agreement, and no party (or any
of its officers, directors, employees, agents, representatives or shareholders)
shall be liable to any other party for any costs, expenses, damage or loss of
anticipated profits hereunder. In the event of any other termination, the
parties shall retain any and all rights attendant to a breach of any covenant,
representation or warranty made hereunder.
XIII. GENERAL PROVISIONS.
-------------------
13.1 Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be delivered by hand or mailed by
certified mail, return receipt requested, first class postage prepaid, or sent
by Federal Express or similarly recognized overnight delivery service with
receipt acknowledged addressed as follows:
(a) If to the Acquired Company:
Strike It Rich Bingo, Inc.
0000-00xx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxx Xxxx Xxxxx
with a copy to:
Xxxxxxxx, Field, Krier, Manning, Xxxxx & Xxxxx, P.C.
0000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
(b) If to the Shareholders:
Xxxx Xxxx Xxxxx
0000-00xx Xxxxxx
Xxxxxxx, XX 00000
(c) If to Purchaser:
American Bingo & Gaming Corp.
0000 Xxxxxxxxxx Xxxxxxx
Xxxx Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
33
with a copy to:
Xxxxxx Xxxxxxx Xxxxx & Xxxxxxxxxxx, L.L.P.
0000 Xxxx Xxxxxx, 0xx Xxxxx
X.X. Xxx 00000
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esquire
(d) If delivered personally, the date on which a notice, request,
instruction or document is delivered shall be the date on which such
delivery is made and, if delivered by mail or by overnight delivery
service, the date on which such notice, request, instruction or document is
received shall be the date of delivery.
(e) Any party hereto may change its address specified for notices
herein by designating a new address by notice in accordance with this
Section 13.1.
13.2 Expenses. Except to the extent set forth in Sections 7.3 or 12.3
--------
hereof, all expenses incurred by the parties hereto in connection with or
related to the authorization, preparation and execution of this Agreement and
the closing of the transactions contemplated hereby shall be borne solely and
entirely by the party which has incurred the same.
13.3 Risk of Loss. Purchaser shall assume no risk of loss with respect to
------------
the Acquired Company prior to the Closing Date.
13.4 Waiver. Any failure on the part of any party hereto to comply with any
------
of its obligations, agreements or conditions hereunder may be waived by any
other party to whom such compliance is owed. No waiver of any provision of this
Agreement shall be deemed, or shall constitute, a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing waiver.
13.5 Binding Effect. This Agreement shall be binding upon and inure to the
--------------
benefit of the parties hereto and their respective heirs, legal representatives,
executors, administrators, successors and assigns.
13.6 Assignment. This Agreement and the respective rights and obligations
----------
of the Shareholders and the Acquired Company hereunder may not be assigned by
the Shareholders or the Acquired Company without the prior written consent of
Purchaser. This Agreement and Purchaser's rights and obligations hereunder may
be freely assigned by Purchaser without the consent of any other party.
13.7 Heading, etc. Headings are for convenience only and do not affect
-------------
interpretation of this Agreement. The following rules of interpretation apply
unless the context requires otherwise:
34
(a) The singular includes the plural and conversely.
(b) A gender includes all genders.
(c) Where a word or phrase is defined, its other grammatical forms
have a corresponding meaning.
(d) A reference to any legislation or to any provision of any
legislation includes any modification or re-enactment of it, any
legislative provision substituted for it, and all regulations and
statutory instruments issued under it.
(e) A reference to conduct includes, without limitation, any omission,
representation, statement or undertaking, whether or not in writing.
(f) Any statement made by a party on the basis of its knowledge,
belief or awareness, is made on the basis that the party has, in order to
establish that the statement is true and not misleading in any respect:
(i) made all reasonable inquiries of any officers, managers,
employees, agents, representatives and other Persons who could
reasonably be expected to have information relevant to the matters to
which the statement relates; and
(ii) where those inquiries would have prompted a reasonable
Person to make further inquiries, made those further inquiries, and
that, as a result of those inquiries, the party has no reason to doubt
that the statement is true and not misleading in any respect.
13.8 Entire Agreement. This Agreement constitutes the entire agreement
-----------------
among the parties hereto and supersedes and cancels any prior agreements,
representations, warranties, or communications, whether oral or written, among
the parties hereto relating to the transactions contemplated hereby or the
subject matter herein. Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, except in writing signed by
the party against whom or which the enforcement of such change, waiver,
discharge or termination is sought.
13.9 Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of Texas, without regard to choice of law
principles.
13.10 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.11 No Agreement Until Executed. This Agreement shall not constitute or
----------------------------
be deemed to evidence a contract or agreement among the parties hereto unless
and until executed by all parties hereto irrespective of negotiations among the
parties or the exchanging of drafts of this Agreement.
35
13.12 Severability. Any term or provision of this Agreement which is
------------
invalid or unenforceable in any jurisdiction shall be ineffective to the extent
of such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining terms or provisions hereof, and any such invalidity
or unenforceability in any such jurisdiction shall not invalidate or render
unenforceable such term or provision in any other jurisdiction; provided,
however, that any such invalidity or unenforceability does not deny any party
hereto any of the basic benefits of the bargain contemplated by this Agreement.
13.13 No Reliance. No third party is entitled to rely on any of the
------------
representations, warranties and agreements contained in this Agreement.
13.14 Confidentiality. The parties hereto agree to keep this Agreement
---------------
confidential, as well as any information or document obtained by either party in
connection with this transaction, except to the extent disclosure is required to
or by any government agency or regulatory or quasi-regulatory body.
13.15 Joint Draftsmanship. The preparation of this Agreement has been a
--------------------
joint effort of the parties and this Agreement shall not, solely as a matter of
judicial construction, be construed more severely against one of the parties
than the other.
13.16 Time of Essence. Time is of the essence in this Agreement.
---------------
36
IN WITNESS WHEREOF, each party hereto has executed or caused this Agreement to
be executed on its behalf, all on the day and year first above written.
AMERICAN BINGO & GAMING CORP.
"PURCHASER"
By: /s/ Xxxxx X. Xxxxxxx
-----------------------
Name Xxxxx X. Xxxxxxx
------------------
Title: CEO
---
STRIKE IT RICH BINGO, INC.
"ACQUIRED COMPANY"
By: /s/ Xxxx Xxxxx
---------------
Name: Xxxx Xxxxx
-----------
Title: President
---------
SHAREHOLDERS:
/s/ Xxxx Xxxxx
----------------------
Xxxx Xxxx Xxxxx
37
GLOSSARY
TO THE
ACQUISITION AGREEMENT
The following definitions apply unless the context requires otherwise.
ABG COMMON STOCK shall have the meaning set forth in Section 2.2(a).
ACQUIRED COMPANY shall mean Strike It Rich Bingo, Inc., a Texas corporation.
AGREEMENT shall mean this Acquisition Agreement and the Exhibits attached
hereto.
APPLICABLE LAWS shall mean all applicable (i) statutes, ordinances or other
legislative enactments of the United States of America or other country or
foreign government, or of any state or political subdivision or agency thereof
(including any county, municipal or other local subdivisions), (ii) rules,
regulations, orders, permits, directives or other actions or approvals of any
Regulatory Authority, and (iii) judgments, awards, orders, decrees, writs and
injunctions of any court, Regulatory Authority or arbitrator.
BENEFIT PLANS shall have the meaning set forth in Section 3.19(a).
CLOSING shall have the meaning set forth in Section 10.1.
CLOSING DATE shall mean the date on which the Closing occurs pursuant to Section
10.1.
CODE shall mean the Internal Revenue Code of 1986, as amended.
COMMON STOCK shall mean the common stock, $0.10 par value per share, of the
Acquired Company.
CONFIDENTIAL INFORMATION shall have the meaning set forth in Section 7.4.
CONTRACT shall mean any contract, lease, license, agreement, promissory note,
debt instrument, commitment, arrangement, undertaking or understanding, whether
written or verbal, conditional or unconditional, and including without
limitation each and every amendment, modification or supplement to any of them.
COVENANTS NOT TO COMPETE shall mean the Covenants Not to Compete among
Purchaser, the Acquired Company, and each of the Persons identified on Exhibit
-------
8.10, substantially in the forms attached as Exhibit 8.10, each of which may be
---- ------------
individually referred to as a "Covenant Not to Compete."
DOL shall mean the United States Department of Labor.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended.
38
ERISA AFFILIATE shall mean, with respect to a Person, any other Person which is
required to be aggregated with such Person under Code Section 414(b), (c), (m)
and/or (o) at any time prior to the Closing Date.
ERISA PLAN shall have the meaning set forth in Section 3.19(a).
HAZARDOUS SUBSTANCE shall have the meaning set forth in Section 3.21.
INTELLECTUAL PROPERTY shall mean all patents, trademarks, trade names, service
marks, service names, brand names, logos, designs, goodwill, proprietary
information, copyrights, licenses and registrations thereof and applications
therefor, or other rights in respect thereof owned, used, or held for use, by
the Acquired Company, and software, know-how, trade secrets, processes,
procedures or any other intellectual property rights owned, used, held by, or
licensed to the Acquired Company.
INTERIM FINANCIAL STATEMENTS shall have the meaning set forth in Section 3.6(a).
IRS shall mean the United States Internal Revenue Service.
LIEN shall mean any mortgage, deed of trust, conveyance to secure debt, pledge,
lien, security interest, claim, encumbrance, charge, option, equity, right,
proxy, voting or other agreement which in any way limits or restricts any right
of ownership of the assets and properties of the Acquired Company.
1996 AND 1997 FINANCIAL STATEMENTS shall have the meaning set forth in Section
3.6(a).
PBGC shall mean the Pension Benefit Guaranty Corporation established under Title
IV of ERISA.
PERMITS shall mean approvals, consents, permissions, licenses, certificates,
permits, franchises, rights and other authorizations.
PERSON shall include, but is not limited to, an individual, a trust, an estate,
a partnership, an association, a company, a corporation, a sole proprietorship,
a professional corporation or a professional association.
PURCHASER shall mean American Bingo & Gaming Corp., a Delaware corporation.
REAL PROPERTY shall have the meaning set forth in Section 3.21.
REGULATORY AUTHORITY shall mean any national, federal, state, county, municipal
or local government, department, commission, board, agency, taxing authority or
other governmental, administrative or regulatory body (whether of the United
States of America or any other country or foreign government).
SEC shall mean the Securities and Exchange Commission.
39
SECURITIES ACT OF 1933 shall mean the Securities Act of 1933, as amended.
SHAREHOLDERS shall mean Xxxx Xxxx Xxxxx, who may be referred to individually as
a "Shareholder".
TAXES shall mean all taxes, assessments, charges, duties, fees, levies or other
governmental charges (including interest, penalties or additions associated
therewith) including federal, state, city, county, foreign or other income,
franchise, capital stock, real property, personal property, tangible,
withholding, FICA, unemployment compensation, disability, transfer, sales, use,
excise, gross receipts and all other taxes of any kind for which the Acquired
Company may have any liability imposed by the United States or any state,
county, city, or other taxing agency or jurisdiction therein, or by any other
country or foreign government or subdivision or agency thereof, whether disputed
or not.
40
LIST OF EXHIBITS
EXHIBITS
---------
3.1 List of Jurisdiction of Incorporation and Jurisdictions Where Registered
3.3 Capitalization
3.4 List of Equity Investments
3.6(a) Financial Statements
3.6(b) List of Liabilities and List of Defaults
3.6(d) Shareholder Loans and Off-Balance Sheet Undertakings
3.7 List of Tax Matters
3.8 List of Tangible Assets and Leases; List of Encumbrances
3.9 List of Violations of Instruments
3.10 List of Required Governmental Consents
3.11 List of Other Required Consents
3.12 List of Changes
3.13 List of Litigation
3.14 List of Permits
3.15 List of Noncompliance with Laws
3.16 List of Contracts
3.17 List of Intellectual Property
3.18 List of Employees, Independent Contractors, Salaries, Rates, Employee Loans or
Advances, and Labor Matters
3.19 List of Benefit Plans
3.21 List of Insurance Matters
41
3.22 List of Related Party Relationships
3.24 Bank Accounts
5.3 List of Purchaser's Violation of Instruments
8.10 Persons to Enter into Covenants Not to Compete; Form of Covenant Not to Compete
8.11 Persons to Enter into Employment Agreements; Form of Employment Agreement
8.13 Form of Indemnification Agreement
42
MATERIAL DIFFERENCES BETWEEN
ACQUISITION AGREEMENT FOR STRIKE IT RICH BINGO, INC.
AND ACQUISITION AGREEMENTS FOR FIVE RELATED ENTITIES
Acquisition Agreements for Five Related Entities:
-----------------------------------------------------
1. Acquisition Agreement dated October 30, 1998 by and between American Bingo
& Gaming Corp., The Samaritan Associates, Inc. and Xxxx Xxxx Xxxxx for the
acquisition of The Samaritan Associates, Inc. by American Bingo & Gaming
Corp.
2. Acquisition Agreement dated October 30, 1998 by and between American Bingo
& Gaming Corp., Xxxxx Management Company and Xxxx Xxxx Xxxxx for the
acquisition of Xxxxx Management Company by American Bingo & Gaming Corp.
3. Acquisition Agreement dated October 30, 1998 by and between American Bingo
& Gaming Corp., Lavaca Enterprises, Incorporated and Xxxx Xxxx Xxxxx for
the acquisition of Lavaca Enterprises, Incorporated by American Bingo &
Gaming Corp.
4. Acquisition Agreement dated October 30, 1998 by and between American Bingo
& Gaming Corp., Lucky Bingo, Inc. and Xxxx Xxxx Xxxxx for the acquisition
of Lucky Bingo, Inc. by American Bingo & Gaming Corp.
5. Acquisition Agreement dated October 30, 1998 by and between American Bingo
& Gaming Corp., Parkway Bingo, Inc. and Xxxx Xxxx Xxxxx for the acquisition
of Parkway Bingo, Inc. by American Bingo & Gaming Corp.
Material Differences:
---------------------
1. Changes to paragraph 2.2 of the Acquisition Agreement to reflect the
different consideration paid by American Bingo & Gaming Corp. for each
entity.
CASH STOCK TOTAL
-------- ------- --------
The Samaritan Associates, Inc. $700,000 $50,000 $750,000
Xxxxx Management Company $715,000 $50,000 $765,000
Lavaca Enterprises, Incorporated $555,000 $40,000 $595,000
Lucky Bingo, Inc. $100,000 $10,000 $110,000
Parkway Bingo, Inc. $515,000 $35,000 $550,000
43
