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EXHIBIT 10.1
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STOCK PURCHASE AGREEMENT
DATED AS OF JANUARY 1, 1999
by and among
GLOBAL ACCESS PAGERS, INC.,
and
PhoneXchange, Inc.,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS .................................................. 1
SECTION 2. SALES AND TRANSFER OF SHARES; CLOSING ........................ 9
2.1 SHARES ....................................................... 9
2.2 PURCHASE PRICE ............................................... 9
2.3 CLOSING ...................................................... 10
2.4 CLOSING OBLIGATIONS .......................................... 10
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLERS .................... 11
3.1 ORGANIZATION AND GOOD STANDING ............................... 11
3.2 AUTHORITY; NO CONFLICT ....................................... 11
3.1 CAPITALIZATION ............................................... 13
3.2 FINANCIAL STATEMENTS ......................................... 13
3.3 BOOKS AND RECORDS ............................................ 13
3.4 TITLE TO PROPERTIES; ENCUMBRANCES ............................ 13
3.5 CONDITION AND SUFFICIENCY OF ASSETS .......................... 14
3.6 ACCOUNTS RECEIVABLE .......................................... 14
3.7 NO UNDISCLOSED LIABILITIES ................................... 15
3.8 TAXES ........................................................ 15
3.9 NO MATERIAL ADVERSE CHANGE ................................... 15
3.10 EMPLOYEE BENEFITS ............................................ 15
3.11 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS ............................................... 16
3.12 LEGAL PROCEEDINGS; ORDERS .................................... 17
3.13 ABSENCE OF CERTAIN CHANGES AND EVENTS ........................ 17
3.14 CONTRACTS; NO DEFAULTS ....................................... 18
3.15 INSURANCE .................................................... 21
3.16 ENVIRONMENTAL MATTERS ........................................ 21
3.17 INTELLECTUAL PROPERTY ........................................ 22
3.18 CERTAIN PAYMENTS ............................................. 23
3.19 DISCLOSURE ................................................... 24
3.20 RELATIONSHIPS WITH RELATED PERSONS ........................... 24
3.21 BROKERS OR FINDERS ........................................... 24
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER ...................... 25
4.1 ORGANIZATION AND GOOD STANDING ............................... 25
4.2 AUTHORITY; NO CONFLICT ....................................... 25
4.3 INVESTMENT INTENT ............................................ 25
4.4 CERTAIN PROCEEDINGS .......................................... 25
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SECTION 5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE ................... 26
5.1 ACCESS AND INVESTIGATION ..................................... 26
5.2 OPERATION OF THE BUSINESSES OF THE COMPANY ................... 26
5.3 NEGATIVE COVENANT ............................................ 26
5.4 NOTIFICATION ................................................. 26
5.5 PAYMENT OF INDEBTEDNESS BY OR TO RELATED PERSONS ............. 27
5.6 NO NEGOTIATION ............................................... 27
5.7 BEST EFFORTS ................................................. 27
SECTION 6. COVENANTS OF BUYER PRIOR TO CLOSING DATE ..................... 27
6.1 BEST EFFORTS ................................................. 27
SECTION 7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE .......... 28
7.1 ACCURACY OF REPRESENTATIONS .................................. 28
7.2 SELLERS' PERFORMANCE ......................................... 28
7.3 ADDITIONAL DOCUMENTS ......................................... 28
7.4 NO PROCEEDINGS ............................................... 29
7.5 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS .......... 29
7.6 NO PROHIBITION ............................................... 29
SECTION 8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE ......... 29
8.1 ACCURACY OF REPRESENTATIONS .................................. 29
8.2 BUYER'S PERFORMANCE .......................................... 30
8.3 NO INJUNCTION ................................................ 30
SECTION 9. TERMINATION .................................................. 30
9.1 TERMINATION EVENTS ........................................... 30
9.2 EFFECT OF TERMINATION ........................................ 31
SECTION 10. INDEMNIFICATION; REMEDIES .................................... 31
10.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY
KNOWLEDGE .................................................... 31
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS ............ 31
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER .............. 32
10.4 RIGHT OF SET-OFF ............................................. 32
10.5 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS .......... 33
10.6 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS ................ 34
SECTION 11. GENERAL PROVISIONS ........................................... 34
11.1 EXPENSES ..................................................... 34
11.2 PUBLIC ANNOUNCEMENTS ......................................... 34
11.3 CONFIDENTIALITY .............................................. 35
11.4 NOTICES ...................................................... 35
11.5 JURISDICTION; SERVICE OF PROCESS ............................. 36
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11.6 FURTHER ASSURANCES ........................................... 36
11.7 WAIVER ....................................................... 36
11.8 ENTIRE AGREEMENT AND MODIFICATION ............................ 37
11.9 DISCLOSURE LETTER ............................................ 37
11.10 ASSIGNMENTS, SUCCESSOR, AND NO THIRD-PARTY RIGHTS ............ 37
11.11 SEVERABILITY ................................................. 38
11.12 SECTION HEADINGS, CONSTRUCTION ............................... 38
11.13 TIME OF ESSENCE .............................................. 38
11.14 GOVERNING LAWS ............................................... 38
11.15 COUNTERPARTS ................................................. 38
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement") dated as of January 1, 1999,
by and among Global Access Pagers, Inc., a Nevada corporation ("GAPI" or
"Buyer") and PhoneXchange, Inc., a Delaware corporation (the "Company"), ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ (collectively, the "Sellers").
WITNESSETH:
WHEREAS, Sellers are the owner of an aggregate of 8,600,000 shares (the
"Shares") of common stock, par value $0.001 per share (the "Common Stock"), of
the Company, being approximately 85.14% of the 10,100,882 outstanding shares of
Common Stock;
WHEREAS, Sellers desire to sell, and Buyer desires to purchase, the
Shares pursuant to this Agreement;
WHEREAS, it is the intention of the parties hereto that, immediately
following consummation of the purchase and sale of the Stock pursuant to this
Agreement Buyer shall own approximately 85.14% of the outstanding shares of
capital stock of the Company.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings specified
or referred to in this Section 1:
"APPLICABLE CONTRACT" -- any Contract (i) under which the Company has or may
acquire any rights, (ii) under which the Company has or may become subject to
any obligation or liability, or (iii) by which the Company or any of the assets
owned or used by it is or may become bound.
"BALANCE SHEET" -- as defined in Section 3.4.
"BEST EFFORTS" -- the efforts that a prudent Person desirous of achieving a
result would use in similar circumstances to ensure that such result is
achieved as expeditiously as possible.
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"BREACH" -- a "Breach" of a representation, warranty, covenant, obligation, or
other provision of this Agreement or any instrument delivered pursuant to this
Agreement will be deemed to have occurred if there is or has been (i) any
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision, or (ii) any
claim (by any Person) or other occurrence or circumstance that is or was
inconsistent with such representation, warranty, covenant, obligation, or other
provision, and the term "Breach" means any such inaccuracy, breach, failure,
claim, occurrence, or circumstance.
"BUYER" -- as defined in the first paragraph of this Agreement.
"CLOSING" -- as defined in Section 2.3.
"CLOSING DATE" -- the date and time as of which the Closing actually takes
place.
"COMPANY" -- as defined in the Recitals of this Agreement, and including any
Subsidiary of the Company.
"CONSENT" -- any approval, consent, ratification, waiver, or other authorization
(including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" -- all of the transactions contemplated by this
Agreement, including:
(a) the sale of the Shares by Sellers to Buyer;
(b) the execution, delivery, and performance of the Employment
Agreements and the Noncompetition Agreements;
(c) the performance by Buyer and Sellers of their respective covenants
and obligations under this Agreement; and
(d) Buyer's acquisition and ownership of the Shares and exercise of
control over the Company.
"CONTRACT" -- any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"DAMAGES" -- as defined in Section 10.2
"DISCLOSURE LETTER" -- the disclosure letter delivered by Sellers to Buyer
concurrently with the execution and delivery of this Agreement.
"EBITDA" -- the net operating earnings before interest, income taxes,
depreciation and amortization of PhoneXchange, determined according to
generally accepted accounting principles consistently applied on the same basis
as EBITDA of the Buyer is (or would be) determined and reported in Buyer's
financial statements, if the Buyer (or as if the Buyer is)
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required to file such financial statements with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and Regulation S-X.
"EMPLOYMENT AGREEMENTS" -- as defined in Section 2.4(a)(iii).
"ENCUMBRANCE" -- any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of ownership.
"ENVIRONMENT" -- soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), ground waters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES" -- any cost, damages, expense,
liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety
and health, and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and
response, investigative, remedial, or inspection costs and expenses
arising under Environmental Law or Occupational Safety and Health
Law;
(c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action,
including any investigation, cleanup, removal, containment, or other
remediation or response actions ("Cleanup") required by applicable
Environmental Law or Occupational Safety and Health Law (whether or
not such Cleanup has been required or requested by any Governmental
Body or any other Person) and for any natural resource damages; or
(d) any other compliance, corrective, investigative, or remedial
measures required under Environmental Law or Occupational Safety and
Health Law.
The terms "removal," "remedial," and "response action," include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as amended
("CERCLA").
"ENVIRONMENTAL LAW" -- any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or
materials, violations of discharge limits, or other prohibitions and
of the commencements of activities, such as
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resource extraction or construction, that could have significant
impact on the Environment;
(b) preventing or reducing to acceptable levels the release of pollutants
or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and used so
that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the transportation
of hazardous substances, pollutants, oil, or other potentially harmful
substances;
(g) cleaning up pollutants that have been released, preventing the threat
of release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of them, for
damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for
injuries done to public assets.
"ERISA"--the Employee Retirement Income Security Act of 1974 or any successor
law, and regulations and rules issued pursuant to that Act or any successor law.
"FACILITIES"--any real property, leaseholds, or other interests currently or
formerly owned or operated by the Company and any buildings, plants,
structures, or equipment (including motor vehicles, tank cars, and rolling
stock) currently or formerly owned or operated by the Company.
"FAIR MARKET VALUE"--shall mean, with respect to any common stock, the average
closing bid price of such common stock quoted on the National Association of
Securities Dealers Automated Quotation System - Bulletin Board ("Nasdaq
Bulletin Board"), or, if such common stock is not listed on the Nasdaq Bulletin
Board, such other exchange as such common stock is then traded or listed, for
the five trading days prior to the date for which such value is determined.
"GAAP"--Generally accepted United States accounting principles, applied on a
basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 3.4(b) were prepared.
"GAPI COMMON STOCK"--restricted common stock of Global Access Pagers, Inc., a
Nevada corporation, which shall bear appropriate legends as required by law,
and which shall be issued pursuant to exemptions to the registration
requirements of the Securities Act under Section 4(2) and Regulation D of the
rules promulgated thereunder.
"GOVERNMENTAL AUTHORIZATION"--any approval, consent, license, permit, waiver,
or other authorization issued, granted, given, or otherwise made available by
or under the authority of any Governmental Body or pursuant to any Legal
Requirement.
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"GOVERNMENTAL BODY" - any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"HAZARDOUS ACTIVITY" - the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release,
storage, transfer, transportation, treatment, or use (including any withdrawal
or other use of groundwater) of Hazardous Materials in, on, under, about, or
from the Facilities or any part thereof into the Environment, and any other
act, business, operation, or thing that increases the danger, or risk of
danger, or poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities or the Company.
"HAZARDOUS MATERIALS" - any waste or other substance that is listed, defined,
designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and
specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
"INTELLECTUAL PROPERTY ASSETS" - as defined in Section 3.22.
"INTERIM BALANCE SHEET" - as defined in Section 3.4.
"IRC" - the Internal Revenue Code of 1986 or any successor law, and regulations
issued by the IRS pursuant to the Internal Revenue Code or any successor law.
"IRS" - the United States Internal Revenue Service or any successor agency,
and, to the extent relevant, the United States Department of the Treasury.
"KNOWLEDGE" - an individual will be deemed to have "Knowledge" of a particular
fact or other matter if:
(a) such individual is actually aware of such fact or other matter; or
(b) a prudent individual could be expected to discover or otherwise become
aware of such fact or other matter in the course of conducting a
reasonably comprehensive investigation concerning the existence of
such fact or other matter.
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A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, employee, partner, executor, or
trustee of such Person (or in any similar capacity) has, or at any time had,
Knowledge of such fact or other matter.
"LEGAL REQUIREMENT"--any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution,
law, ordinance, principle of common law, regulation, statute, or treaty.
"NONCOMPETITION AGREEMENTS"--as defined in Section 2.4(a)(iv).
"OCCUPATIONAL SAFETY AND HEALTH LAW"--any Legal Requirement designed to provide
safe and healthful working conditions and to reduce occupational safety and
health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"ORDER"--any award, decision, injunction, judgment, order, ruling, subpoena,
confirmation or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS"--an action taken by a Person will be deemed to
have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person and
is taken in the ordinary course of the normal day-to-day operations of
such Person;
(b) such action is not required by applicable law or common practice to be
authorized by the board of directors of such Person (or by any Person
or group of Persons exercising similar authority) and is not required
to be authorized by the shareholders of such Person; and
(c) such action is similar in nature and magnitude to actions customarily
taken, without any authorization by the board of directors (or by any
Person or group of Persons exercising similar authority), in the
ordinary course of the normal day-to-day operations of other Persons
that are in the same line of business as such Person.
"ORGANIZATIONAL DOCUMENTS"--(i) the articles or certificate of incorporation
and the bylaws of a corporation; (ii) the partnership agreement and any
statement of partnership of a general partnership; (iii) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (iv) any charter or similar document adopted or filed in
connection with the creation, formation, or organization of a Person; and (v)
any amendment to any of the foregoing.
"PERSON"--any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity or
Governmental Body.
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"PLAN" -- as defined in Section 3.13.
"PROCEEDING" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"RELATED PERSON" -- with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more member's of such individual's Family;
(c) any Person in which such individual or members of such individual's
Family hold (individually or in the aggregate) a Material Interest;
and
(d) any Person with respect to which such individual or one or more
members of such individual's Family serves as a director, officer,
partner, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common
control with such specified Person;
(b) any Person that holds a Material Interest in such specified Person;
(c) each Person that serves as a director, officer, partner, executor,
or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material Interest;
(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or (c).
For purposes of this definition, (i) the "Family" of an individual includes (1)
the individual, (2) the individual's spouse and former spouses, (3) any other
natural person who is related to the individual or the individual's spouse
within the second degree, and (4) any other natural person who resides with
such individual, and (ii) "Material Interest" means direct or indirect
beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934) of voting securities or other voting interests representing at
least 10% of the outstanding voting power of a Person or equity securities or
other equity interests representing at least 10% of the outstanding equity
securities or equity interests in a Person.
"RELEASE" -- any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"REPRESENTATIVE" -- with respect to a particular Person, any director, officer,
employee, agent, consultant, advisor, or other representative of such Person,
including legal counsel, accountants, and financial advisors.
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"SECURITIES ACT" -- the Securities Act of 1933, as amended, or any successor
law, and regulations and rules issued pursuant to that Act or any successor law.
"SELLERS" -- as defined in the first paragraph of this Agreement.
"SELLERS' RELEASES" -- as defined in Section 2.4.
"SHARES" -- as defined in the Recitals of this Agreement.
"SUBSIDIARY" -- with respect to any Person (the "Owner"), any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of the Company.
"TAX RETURN" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"THREAT OF RELEASE" -- a substantial likelihood of a Release that may require
action in order to prevent or mitigate damage to the Environment that may
result from such Release.
"THREATENED" -- a claim, Proceeding, dispute, action, or other matter will be
deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing), or
if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
SECTION 2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES. Subject to the terms and conditions of this Agreement, at the
Closing, Sellers will sell and transfer the Shares to Buyer, and Buyer will
purchase the Shares from Sellers.
2.2 PURCHASE PRICE. The purchase price (the "Purchase Price") for the Shares
will be $6,450,003, subject to adjustment as set forth below, plus the Earnout
Amount.
(a) Purchase Price. The Purchase Price will be paid in shares of GAPI
Common Stock equal to the result of the greater of (i) dividing the Purchase
Price by the Fair Market Value per share of the GAPI Common Stock, or (ii)
921,429 shares of GAPI Common Stock. These shares will be issued as follows:
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(i) 307,161 shares shall be issued within five days of Closing;
(ii) 614,268 will be issued if and to the extent that the Company
achieves at least $1,000,000 in EBITDA during the period
commencing on the Closing and ending August 31, 1999, at the
rate of .614268 additional shares for each dollar of EBITDA
achieved by the Company during such period; provided, however,
that in no event shall more than 614,268 shares be issued
pursuant to this Section 2.2(a)(ii).
(b) Earnout. The Purchase Price shall be increased by the following
payments (the "Earnout Payments"), payable through December 31, 2001
(the "Earnout Period"), provided, however, that the maximum
aggregate number of shares of GAPI Common Stock to be issued
pursuant to all Earnout Payments shall not exceed (i) the sum of
2,600,000 shares, less (ii) the number of shares of GAPI Common
Stock issuable pursuant to Section 2.2(a) above, as adjusted
pursuant to Section 2.2(b) above. In the event that the Company
achieves EBITDA in any single calendar month (or an average monthly
EBITDA over any three month period of any fiscal quarter) during the
Earnout Period (excluding the net profit allocable to any minority
interest in the Company) set forth below, Sellers shall be issued
additional shares of GAPI Common Stock as set forth below:
Additional Shares
Monthly EBITDA Per Month
----------------------- -----------------
$1,300,000 - $2,599,999 50,000
$2,600,000 - $3,899,999 100,000
$3,900,000 - $5,199,999 150,000
$5,200,000 - $6,499,999 200,000
Each additional $1,300,000 50,000
million
2.3 CLOSING
The purchase and sale (the "Closing") provided for in this Agreement will take
place at the offices of Buyer's consultant at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. (local time) on January 29, 1999, or at such
other time and place as the parties may agree. Subject to the provisions of
Section 9, failure to consummate the purchase and sale provided for in this
Agreement on the date and time and at the place determined pursuant to this
Section 2.3 will not result in the termination of this Agreement and will not
relieve any party of any obligation under this Agreement.
2.4 CLOSING OBLIGATIONS
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At the Closing:
(a) Sellers will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers), with signatures
guaranteed by a commercial bank or by a member firm of the New
York Stock Exchange, for transfer to Buyer;
(ii) releases in the form of Exhibit 2.4(a)(ii) executed by Sellers
(collectively, "Sellers' Releases");
(iii) employment agreements in the form of Exhibit 2.4(a)(iii),
executed by Sellers (collectively, "Employment Agreements");
(iv) noncompetition agreements in the form of Exhibit 2.4(a)(iv),
executed by Sellers (collectively, the "Noncompetition
Agreements");
(v) a certificate executed by Sellers representing and warranting
to Buyer that each of Sellers' representations and warranties
in this Agreement was accurate in all respects as of the date
of this Agreement and is accurate in all respects as of the
Closing Date as if made on the Closing Date (giving full effect
to any supplements to the Disclosure Letter that were delivered
by Sellers to Buyer prior to the Closing Date in accordance
with Section 5.4); and
(vi) the resignation of any or all members of the board of directors
of the Company, as directed by Buyer.
(b) Buyer will deliver to Sellers:
(i) Such number of shares of GAPI Common Stock as required pursuant
to Section 2.2(a), registered on the books of Buyer in the
names and denominations as requested by Sellers in writing
prior to the Closing; and
(ii) the Employment Agreements, executed by Buyer.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, and the Company, represent and warrant to Buyer
as follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) The Company is a corporation duly organized, validly existing, and in
good standing under the laws of Delaware, with full corporate power
and authority to conduct its business as it is now being conducted,
to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under Applicable Contracts.
The Company is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each state or other
jurisdiction in which either the ownership or use of the properties
owned or used by it, or the nature of the activities conducted by it,
requires such qualification.
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(b) Sellers have delivered to Buyer copies of the Organizational
Documents of the Company, as currently in effect.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligations
of Sellers, enforceable against Sellers in accordance with its terms.
Upon the execution and delivery by Sellers of the Employment
Agreements, the Sellers' Releases, and the Noncompetition Agreements
(collectively, the "Sellers' Closing Documents"), the Sellers'
Closing Documents will constitute the legal, valid, and binding
obligations of Sellers, enforceable against Sellers in accordance
with their respective terms. Sellers have the absolute and
unrestricted right, power, authority, and capacity to execute and
deliver this Agreement and the Sellers' Closing Documents and to
perform their obligations under this Agreement and the Sellers'
Closing Documents.
(b) Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions
will, directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with, or result in a violation of (1) any
provision of the Organizational Documents of the Company, or
(2) any resolution adopted by the board of directors or the
stockholders of the Company;
(ii) contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise
any remedy or obtain any relief under, any Legal Requirement or
any Order to which the Company or any Seller, or any of the
assets owned or used by the Company, may be subject;
(iii) contravene, conflict with, or result in a violation of any of
the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate, or
modify, any Governmental Authorization that is held by the
Company or that otherwise relates to the business of, or any of
the assets owned or used by, the Company;
(iv) cause Buyer or the Company to become subject to, or to become
liable for the payment of, any Tax;
(v) cause any of the assets owned by the Company to be reassessed
or revalued by any taxing authority or other Governmental Body;
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(vi) contravene, conflict with, or result in a violation or breach
of any provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify,
any Applicable Contract; or
(vii) result in the imposition or creation of any Encumbrance upon or
with respect to any of the assets owned or used by the Company;
Neither the Seller nor the Company is or will be required to give any notice to
or obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
Sellers are acquiring the GAPI Common Stock for their own account and not with
a view to their distribution within the meaning of Section 2(11) of the
Securities Act. Each Seller is either (i) an "accredited investor" as such term
is defined in Rule 501(a) under the Securities Act, or (ii) represented by an
accredited investor who is sophisticated in financial transactions and is
competent to represent, and has represented, and such Seller in this
transaction such that such Seller is considered an accredited investor for
purposes of Regulation D promulgated under the Securities Act.
3.3 CAPITALIZATION
The authorized equity securities of the Company consist of 50,000,000 shares of
common stock, par value $0.001 per share, of which 10,100,882 shares are issued
and outstanding, and 5,000,000 shares of preferred stock, par value $0.001, of
which none are outstanding. Sellers are and will be on the Closing Date the
record and beneficial owners and holders of the Shares, free and clear of all
Encumbrances. Each of the Sellers owns the shares of Common Stock as set forth
opposite such Seller's name on Schedule 3.1 attached hereto. All of the Shares
have been duly authorized and validly issued and are fully paid and
nonassessable. There are no Contracts relating to the issuance, sale, or
transfer of any equity securities or other securities of the Company. None of
the outstanding equity securities or other securities of the Company was issued
in violation of the Securities Act or any other Legal Requirement. The Company
does not own, or have any Contract to acquire, any equity securities or other
securities of any Person or any direct or indirect equity or ownership interest
in any other business.
3.4 FINANCIAL STATEMENTS
Sellers have delivered to Buyer the unaudited financial statements attached
hereto as Schedule 3.2 of the Disclosure Letter (the "Financial Statements").
Such Financial Statements and notes fairly present the financial condition and
the results of operations, changes in stockholders' equity, and cash flow of
the Company as at the respective dates of and for the periods referred to in
such financial statements, all in accordance with GAAP; the Financial
Statements referred to in this Section 3.2 reflect the consistent application
of such accounting principles throughout the periods involved.
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3.5 BOOKS AND RECORDS
The books of account, minute books, stock record books, and other records of
the Company, all of which have been made available to Buyer, are complete and
correct and have been maintained in accordance with sound business practices.
The minute books of the Company contain accurate and complete records of all
meetings held of, and corporate action taken by, the stockholders, the Boards
of Directors, and committees of the Boards of Directors of the Company, and no
meeting of any such stockholders, Board of Directors, or committee has been
held for which minutes have not been prepared and are not contained in such
minute books. At the Closing, all of those books and records will be in the
possession of the Company.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES
Schedule 3.6 of the Disclosure Letter contains a complete and accurate list of
all real property, leaseholds, or other interest therein owned by the Company.
The Company owns all the properties and assets (whether real, personal, or
mixed and whether tangible or intangible) that they purport to own or located
in the facilities owned or operated by the Company or reflected as owned in the
books and records of the Company, including all of the properties and assets
reflected in the Financial Statements (except for assets held under
capitalized leases disclosed Schedule 3.6 of the Disclosure Letter, and all of
the properties and assets purchased or otherwise acquired by the Company since
the date of the Financial Statements. All material properties and assets
reflected in the Financial Statements are free and clear of all Encumbrances
except, with respect to all such properties and assets, (i) mortgage or
security interests shown on the financial Statements as securing specified
liabilities or obligations, with respect to which no default (or event that,
with notice or lapse of time or both, would constitute a default) exists, (ii)
mortgages or security interests incurred in connection with the purchase of
property or assets after the date of the Financial Statements (such mortgages
and security interests being limited to the property or assets so acquired),
with respect to which no default (or event that, with notice or lapse of time
or both, would constitute a default) exists, and (iii) liens for current taxes
not yet due.
3.7 CONDITION AND SUFFICIENCY OF ASSETS
The buildings, plants, structures, and equipment of the Company are
structurally sound, are in good condition and repair, and are adequate for the
uses to which they are being put, and none of such buildings, plants,
structures, or equipment is in need of maintenance or repairs except for
ordinary, routine maintenance and repairs that are not material in nature or
cost. The building, plants, structures, and equipment of the Company are
sufficient for the continued conduct of the Company's businesses after the
Closing in substantially the same manner as conducted prior to the Closing.
3.8 ACCOUNTS RECEIVABLE
All accounts receivable of the Company that are reflected on the balance sheet
contained in the Financial Statements (the "Balance Sheet") or on the
accounting records of the Company as of
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the Closing Date (collectively, the "Accounts Receivable") represent or will
represent valid obligations arising from sales actually made or services
actually performed in the Ordinary Course of Business. Unless paid prior to the
Closing Date, the Accounts Receivable are or will be as of the Closing Date
current and collectible net of the respective reserves shown on the Balance
Sheet or on the accounting records of the Company as of the Closing Date (which
reserves are adequate and calculated consistent with past practice. Subject to
such reserves, each of the Accounts Receivable either has been or will be
collected in full, without any set-off, within ninety days after the day on
which it first becomes due and payable. There is no contest, claim, or right of
set-off, other than returns in the Ordinary Course of Business, under any
Contract with any obligor of an Accounts Receivable relating to the amount or
validity of such Accounts Receivable.
3.9 NO UNDISCLOSED LIABILITIES
The Company has no liabilities or obligations of any nature (whether known or
unknown and whether absolute, accrued, contingent, or otherwise) except for
liabilities or obligations reflected or reserved against in the most recent
Balance Sheet and current liabilities incurred in the Ordinary Course of
Business since the date thereof.
3.10 TAXES
(a) The Company has filed or caused to be filed (on a timely basis since
its inception) all Tax Returns that are or were required to be filed
by or with respect to it pursuant to applicable Legal Requirements.
The Company has paid, or made provision for the payment of, all Taxes
that have or may have become due pursuant to those Tax Returns or
otherwise, or pursuant to any assessment received by Sellers or the
Company.
(b) There is no pending audit of any Tax Return of the Company.
(c) The charges, accruals, and reserves with respect to Taxes on the
respective books of the Company are adequate (determined in
accordance with GAAP) and are at least equal to the Company's
liability for Taxes. There exists no proposed tax assessment against
the Company. No consent to the application of Section 341(f)(2) of
the IRC has been filed with respect to any property or assets held,
acquired, or to be acquired by the Company. All Taxes that the
Company is or was required by Legal Requirements to withhold or
collect have been duly withheld or collected and, to the extent
required, have been paid to the proper Governmental Body or other
Person.
(d) All Tax Returns filed by the Company are true, correct, and complete.
3.11 NO MATERIAL ADVERSE CHANGE
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Since the date of the most recent Balance Sheet, there has not been any
material adverse change in the business, operations, properties, prospectus,
assets, or condition of the Company, and no event has occurred or circumstance
exists that may result in such a material adverse change.
3.12 EMPLOYEE BENEFITS.
(a) There is no Plan or Welfare Plan of which the Company or an ERISA
Affiliate of the Company is or was a Plan Sponsor, or to which the
Company or an ERISA Affiliate of the Company otherwise contributes or
has contributed, or in which the Company or an ERISA Affiliate of the
Company otherwise participates or has participated.
(b) Definitions:
(i) "ERISA Affiliate" means, with respect to the Company, any other
person that, together with the Company, would be treated as a
single employer under IRC Section 414.
(ii) "Plan" has the meaning given in ERISA Section 3(3).
(iii) "Plan Sponsor" has the meaning given in ERISA Section 3(16)(B).
(iv) "Welfare Plan" has the meaning given in ERISA Section 3(1).
3.13 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) the Company is, and at all times since its inception has been, in full
compliance with each Legal Requirement that is or was applicable to it
or to the conduct or operation of its business or the ownership or use
of any of its assets;
(b) no event has occurred or circumstance exists that (with or without
notice or lapse of time) (i) may constitute or result in a violation
by the Company of, or a failure on the part of the Company to comply
with, any Legal Requirement, or (ii) may give rise to any obligation
on the part of the Company to undertake, or to bear all or any portion
of the cost of, any remedial action of any nature; and
(c) the Company has not received, at any time, any notice or other
communication (whether oral or written) from any Governmental Body or
any other Person regarding (i) any actual, alleged, possible, or
potential violation of, or failure to comply with, any Legal
Requirement, or (ii) any actual, alleged, possible, or potential
obligation on the part of the Company to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature.
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(d) Schedule 3.11 of the Disclosure Letter contains a complete and
accurate list of each Governmental Authorization that is held,
or required to be held, by the Company or that otherwise
relates to the business of, or to any of the assets owned or
used by, the Company. Each Governmental Authorization listed or
required to be listed in Schedule 3.11 of the Disclosure Letter
is valid and in full force and effect. No event has occurred or
circumstance exists that may (with or without notice or lapse
of time) (1) constitute or result directly or indirectly in a
violation of or a failure to comply with any term or requirement
of any Governmental Authorization listed or required to be
listed in Schedule 3.11 of the Disclosure Letter, or (2) result
directly or indirectly in the revocation, withdrawal,
suspension, cancellation, or termination or, or any
modification to, any Governmental Authorization listed or
required to be listed in Schedule 3.11 of the Disclosure
Letter. The Governmental Authorizations listed in Schedule 3.11
of the Disclosure Letter collectively constitute all of the
Governmental Authorizations necessary to permit the Company to
lawfully conduct and operate its businesses in the manner it
currently conducts and operates such businesses and to permit
the Company to own and use its assets in the manner in which it
currently owns and uses such assets.
3.14 LEGAL PROCEEDINGS; ORDERS
(a) There is no pending Proceeding that has been commenced by or
against the Company or that otherwise relates to or may affect
the business of, or any of the asses owned or used by, the
Company, or that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering
with, any of the Contemplated Transactions. No event has
occurred or circumstance exists that may give rise to or serve
as a basis for the commencement of any such Proceeding. To the
Knowledge of Sellers and the Company, no such Proceeding has
been Threatened.
(b) There is no Order to which the Company, or any of the assets
owned or used by the Company, is subject, and no Seller is
subject to any Order that relates to the business of, or any of
the assets owned by or used by, the Company. No officer,
director, agent, or employee of the Company is subject to any
Order that prohibits such officer, director, agent, or employee
from engaging in or continuing any conduct, activity, or
practice relating to the business of the Company.
3.15 ABSENCE OF CERTAIN CHANGES AND EVENTS
Since the date of the most recent Balance Sheet, the Company has conducted its
businesses only in the Ordinary Course of Business and there has not been any:
(a) change in the Company's authorized or issued capital stock;
grant of any stock option or right to purchase shares of
capital stock of the Company; issuance of any
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security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other
acquisition by the Company of any shares of any such capital
stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of capital stock;
(b) amendment to the Organizational Documents of the Company;
(c) payment or increase by the Company of any bonuses, salaries, or
other compensation to any stockholder, director, officer, or
(except in the Ordinary Course of Business) employee or entry
into any employment, severance, or similar Contract with any
director, officer, or employee;
(d) adoption or existence of any profit sharing, bonus, deferred
compensation, savings, insurance, pension, retirement, or other
employee benefit plan for or with any employees of the Company;
(e) damage to or destruction or loss of any asset or property of
the Company, whether or not covered by insurance, materially or
adversely affecting the properties, assets, business, financial
condition, or prospects of the Company, taken as a whole;
(f) termination of, or receipt of notice of termination of (i) any
license, distribution, joint venture, credit, or similar
agreement, or (ii) any Contract or material transaction;
(g) sale, lease, or other disposition of any asset or property of
the Company or mortgage, pledge, or imposition of any lien or
other encumbrance on any material asset or property of the
Company, including the sale, lease, or other disposition of any
of the Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a value to
the Company in excess of $5,000;
(i) material change in the accounting methods used by the Company;
or
(j) agreement, whether oral or written, by the Company to do any of
the foregoing.
3.16 CONTRACTS; NO DEFAULTS
(a) Schedule 3.14(a) of the Disclosure Letter contains a complete
and accurate list, and Sellers have delivered to Buyer true and
complete copies, of:
(i) each Applicable Contract that involves performance of
services by the Company of an amount or value in excess
of $10,000;
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(ii) each Applicable Contract that involves performance of
services or delivery of goods or materials to the
Company of an amount or value in excess of $10,000;
(iii) each Applicable Contract that was not entered into in
the Ordinary Course of Business;
(iv) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other
Applicable Contract affecting the ownership of, leasing
of, title to, use of, or any leasehold or other
interest in, any real or personal property;
(v) each licensing agreement or other Applicable Contract
with respect to patents, trademarks, copyrights, or
other intellectual property, including agreements with
current or former employees, consultants, or
contractors regarding the appropriation or the
non-disclosure of any of the Intellectual Property
Assets;
(vi) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of
profits, losses, costs, or liabilities by the Company
with any other Person;
(vii) each Applicable Contract containing covenants that in
any way purport to restrict the business activity of
the Company or any Affiliate of the Company or limit
the freedom of the Company or any Affiliate of the
Company to engage in any line of business or to compete
with any Person;
(viii) each Applicable Contract providing for payments to or
by any Person based on sales, purchases, or profits,
other than direct payments for goods or services
provided by the Company;
(ix) each power of attorney that is currently effective and
outstanding;
(x) each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides
for an express undertaking by the Company to be
responsible for consequential damages;
(xi) each Applicable Contract for capital expenditures in
excess of $10,000;
(xii) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance
extended by the Company; and
(xiii) each amendment, supplement, and modification (whether
oral or written) in respect of any of the foregoing.
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(b) Except as set forth in Schedule 3.14(b) of the Disclosure Letter, no
Seller (and no Related Person or any Seller) has or may acquire any
rights under, and no Seller has or may become subject to any
obligation or liability under, any Contract that relates to the
business of, or any of the assets owned or used by, the Company.
(c) Each Contract identified or required to be identified in Schedule
3.14(a) of the Disclosure Letter is in full force and effect and is
valid and enforceable in accordance with its terms.
(d) Except as set forth in Schedule 3.14(a) of the Disclosure Letter:
(i) the Company is, and at all times has been, in full compliance
with all applicable terms and requirements of each Contract
under which the Company has or had any obligation or liability
or by which the Company or any of the assets owned or used by
the Company is or was bound;
(ii) each other Person that has or had any obligations or liability
under any Contract under which the Company has or had any rights
is, and at all times has been, in full compliance with all
applicable terms and requirements of such Contract;
(iii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with,
or result in a violation or breach of, or give the Company or
other Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate, or modify, any Applicable Contract; and
(iv) the Company has not given to or received from any other Person
any notice or other communication (whether oral or written)
regarding any actual, alleged, possible, or potential violation
or breach of, or default under, any Contract.
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or
payable to the Company under current or completed Contract with any
Person and no such Person has made written demand for such
renegotiation.
(f) The Contract relating to the sale or provision of services by the
Company have been entered into in the Ordinary Course of Business and
have been entered into without the commission of any act alone or
in concert with any other Person, or any consideration having been
paid or promised, that is or would be in violation of any Legal
Requirements.
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3.17 INSURANCE
(a) Sellers have delivered to Buyer true and complete copies of all
policies of insurance to which the Company is a party or under which
the Company, or any director of the Company, is or has been covered
at any time.
(i) All policies to which the Company is a party or that provide
coverage to the Sellers, the Company, or any director or officer
of the Company:
(ii) Neither any Seller nor the Company has received (1) any refusal
of coverage or any notice that a defense will be afforded with
reservation of rights, or (2) any notice of cancellation or any
other indication that any insurance policy is no longer in full
force and effect or will not be renewed or that the issuer of
any policy is not willing or able to perform its obligations
thereunder.
(iii) The Company has paid all premiums due, and has otherwise
performed all of its obligations, under each policy to which
the Company is a party or that provides coverage to the Company.
(iv) The Company has given notice to the insurer of all claims that
may be insured thereby.
3.18 ENVIRONMENTAL MATTERS
(a) The Company is, and at all times has been, in full compliance with,
and has not been and is not in violation of or liable under, any
Environmental Law. Neither the Sellers nor the Company have any basis
to expect, nor have any of them or any other Person for whose conduct
they are or may be held to be responsible received, any actual or
Threatened order, notice, or other communication from (i) any
Governmental Body or private citizen acting in the public interest,
or (ii) the current or prior owner or operator of any Facilities, of
any actual or potential violation of failure to comply with any
Environmental Law, or of any actual or Threatened obligation to
undertake or bear the cost of any Environmental, Health and Safety
Liabilities with respect to any of the Facilities or any other
properties or assets (whether real, personal, or mixed) in which the
Company has had an interest, or with respect to any property or
Facility at or to which Hazardous Materials were generated,
manufactured, refined, transferred, imported, used, or processed by
Sellers, the Company, or any other Person for whose conduct they are
or may be held responsible, or from which Hazardous Materials have
been transported, treated, stored, handled, transferred, disposed,
recycled, or received.
(b) Neither the Sellers nor the Company have any basis to expect, nor
have any or them or any other Person for whose conduct they are or
may be held responsible, received, any citation, directive, inquiry,
notice, Order, summons, warning, or other communication that relates
to Hazardous Activity, Hazardous Materials, or
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any alleged, actual, or potential violation or failure to comply with
any Environmental Law.
(c) There are no Hazardous Materials present on or in the Environment at
the Facilities or at any geologically or hydrologically adjoining
property. Neither the Sellers nor the Company, nor any other Person
for whose conduct they are or may be held responsible, have permitted
or conducted, or is aware of, any Hazardous Activity conducted with
respect to the Facilities or any other properties or assets (whether
real, personal, or mixed) in which Sellers or the Company has or had
an interest.
(d) There has been no Release or, to the Knowledge of Sellers and the
Company, Threat of Release, of any Hazardous Materials at or from the
Facilities, or from or by any other properties and assets (whether
real, personal, or mixed) in which Sellers or the Company has or had
an interest, whether by Sellers, the Company, or any other Person.
3.19 INTELLECTUAL PROPERTY
(a) Intellectual Property Assets--The term "Intellectual Property Assets"
includes:
(i) the name PhoneXchange, all fictional business names, trading
names, registered and unregistered trademarks, service marks,
and applications (collectively, "Marks");
(ii) all patents, patent applications, and inventions and discoveries
that may be patentable (collectively, "patents");
(iii) all copyrights in both published works and unpublished works
(collectively, "Copyrights");
(iv) all rights in mask works (collectively, "Rights in Mask Works");
and
(v) all know-how, trade secrets, confidential information, customer
lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively,
"Trade Secrets"); owned, used, or licensed by the Company as
licensee or licensor.
(b) Agreements--There are no Contracts relating to the Intellectual
Property Assets to which the Company is a party or by which the
Company is bound, except for any license implied by the sale of a
product and perpetual, paid-up licenses for commonly available
software programs with a value of less than $5,000 under which the
Company is the licensee. There are no outstanding and, to Sellers
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Knowledge, no Threatened disputes or disagreements with respect to any
such agreement.
(c) Know-How Necessary for the Business
(i) The Intellectual Property Assets are all those necessary for the
operation of the Company' businesses as they are currently
conducted. The Company is the owner of all right, title, and
interest in and to each of the Intellectual Property Assets, free
and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims, and has the
right to use without payment to a third party all of the
Intellectual Property Assets.
3.20 CERTAIN PAYMENTS
Neither the Company nor any director, officer, agent, or employee of the
Company, or any other Person associated with or acting for or on behalf of the
Company, has directly or indirectly (i) made any contribution, gift, bribe,
rebate, payoff, influence payment, kickback, or other payment to any Person,
private or public, regardless of form, whether in money, property, or services
(1) to obtain favorable treatment in securing business, (2) to pay for
favorable treatment for business secured, (3) to obtain special concessions or
for special concessions already obtained, for or in respect of the Company or
any Affiliate of the Company, or (4) in violation of any Legal Requirement,
(ii) established or maintained any fund or asset that has not been recorded in
the books and records of the Company.
3.21 DISCLOSURE
(a) No representation or warranty of Sellers in this Agreement and no
statement in the Disclosure Letter omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 5.4 will contain any untrue
statement or omit to state a material fact necessary to make the
statements therein or in this Agreement, in light of the circumstances
in which they were made, not misleading.
(c) There is no fact known to any Seller that has specific application to
any Seller or the Company (other than general economic or industry
conditions) and that materially adversely affects or, as far as either
Seller can reasonably foresee, materially threatens, the assets,
business, prospects, financial condition, or results of operations of
the Company that has not been set forth in this Agreement or the
Disclosure Letter.
3.22 RELATIONSHIPS WITH RELATED PERSONS
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No Seller or any Related Person of Sellers or of the Company has, or has had,
any interest in any property (whether real, personal, or mixed and whether
tangible or intangible), used in or pertaining to the Company's businesses. No
Seller or any Related Person of Sellers or of the Company is, or owns (of
record or as a beneficial owner) an equity interest or any other financial or
profit interest in, a Person that has (i) had business dealings or a material
financial interest in any transaction with the Company other than business
dealings or transactions conducted in the Ordinary Course of Business with the
Company at substantially prevailing market prices and on substantially
prevailing market terms, or (ii) engaged in competition with the Company with
respect to any line of the products or services of the Company (a "Competing
Business") in any market presently served by the Company. No Seller or any
Related Person of Sellers or of the Company is a party to any Contract with, or
has any claim or right against, the Company.
3.23 BROKERS OR FINDERS
Sellers and their agents have incurred no obligation or liability, contingent
or otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement, other than fees due to
▇▇▇▇▇▇ ▇▇▇▇▇▇, which fees shall be paid by Sellers, and Sellers shall hold the
Company and Buyer harmless from and against any claim, action or Proceeding
arising in connection with any fees or amounts due ▇▇▇▇▇▇ ▇▇▇▇▇▇.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Nevada.
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms.
Buyer has the absolute and unrestricted right, power, and authority
to execute and deliver this Agreement and to perform its obligations
under this Agreement.
(b) Neither the execution and delivery of this Agreement by Buyer nor
the consummation or performance of any of the Contemplated
Transactions by Buyer will give any Person the right to prevent,
delay, or otherwise interfere with any of the Contemplated
Transactions pursuant to:
(i) any provision of Buyer's Organizational Documents; or
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(ii) any resolution adopted by the board of directors or the
stockholders of Buyer;
Buyer is not and will not be required to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
4.3 INVESTMENT INTENT
Buyer is acquiring the Shares for its own account and not with a view to their
distribution within the meaning of Section 2(11) of the Securities Act.
4.4 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against Buyer and that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions. To Buyer's
Knowledge, no such Proceeding has been Threatened.
4.5 CAPITALIZATION
The authorized equity securities of the Buyer consist of 250,000,000 shares of
common stock, par value $0.001 per share, of which 8,172,439 shares are issued
and outstanding, and upon filing of amended articles of the Company with the
Secretary of State of the State of Nevada, it is anticipated that there will be
1,000,000 shares of preferred stock, par value $2.50 authorized, of which
850,000 will be issued immediately thereafter. There are no options, warrants or
other rights to acquire common stock outstanding as of the date hereof. The GAPI
Common Stock to be issued to the Sellers on the Closing Date will be free and
clear of all Encumbrances (other than as provided in this Agreement). All of
such shares of Common Stock shall be duly authorized and validly issued, will be
fully paid and nonassessable, as of the Closing Date.
4.6 FINANCIAL STATEMENTS
Buyer has delivered or will deliver to Seller the unaudited financial statements
of the Buyer as of December 31, 1998 (the "Buyer Financial Statements"). Such
Buyer Financial Statements and notes fairly present the financial condition and
the results of operations, changes in stockholders' equity, and cash flow of the
Buyer as at the respective dates of and for the periods referred to in such
Buyer Financial Statements, all in accordance with GAAP; the Buyer Financial
Statements referred to in this Section 3.2 reflect the consistent application of
such accounting principles throughout the periods involved.
4.7 NO UNDISCLOSED LIABILITIES
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The Company has no liabilities or obligations of any nature (whether known or
unknown and whether absolute, accrued, contingent, or otherwise) except for
liabilities or obligations reflected or reserved against in the most recent
Balance Sheet and current liabilities incurred in the Ordinary Course of
Business since the date thereof.
4.8 DISCLOSURE
(a) No representation or warranty of Sellers in this Agreement and no
statement in the Disclosure Letter omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
SECTION 5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date, Sellers will, and will
cause the Company and its Representatives to, (i) afford Buyer and its
Representatives (collectively, "Buyer's Advisors") full and free access to the
Company's personnel, properties, contracts, books and records, and other
documents and data, (ii) furnish Buyer and Buyer's Advisors with copies of all
such contracts, books and records, and other existing documents and data as
Buyer may reasonably request, and (iii) furnish Buyer and Buyer's Advisors with
such additional financial, operating, and other data and information as Buyer
may reasonably request.
5.2 OPERATION OF THE BUSINESSES OF THE COMPANY
Between the date of this Agreement and the Closing Date, Sellers will, and will
cause the Company to:
(a) conduct the business of the Company only in the Ordinary Course of
Business;
(b) use their Best Efforts to preserve intact the current business
organization of the Company, keep available the services of the
current officers, employees, and agents of the Company, and maintain
the relations and good will with suppliers, customers, landlords,
creditors, employees, agents, and others having business relationships
with the Company;
(c) confer with Buyer concerning operational matters of a material nature;
and
(d) otherwise report periodically to Buyer concerning the status of the
business, operations, and finances of the Company.
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5.3 NEGATIVE COVENANT
Except as otherwise expressly permitted by this Agreement, between the date of
this Agreement and the Closing Date, Sellers will not, and will cause the
Company not to, without the prior consent of Buyer, take any affirmative
action, or fail to take any reasonable action within their or its control, as a
result of which any of the changes or events listed in Section 3.13 is likely to
occur.
5.4 NOTIFICATION
Between the date of this Agreement and the Closing Date, each Seller will
promptly notify Buyer in writing if such Seller or the Company become aware of
any fact or condition that causes or constitutes a Breach of any of Sellers'
representations and warranties as of the date of this Agreement, or if such
Seller or the Company becomes aware of the occurrence after the date of this
Agreement of any fact or condition that would (except as expressly contemplated
by this Agreement) cause or constitute a Breach of any such representation or
warranty had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. Should any such fact or
condition require any change in the Disclosure Letter if the Disclosure Letter
were dated the date of the occurrence or discovery of any such fact or
condition, Sellers will promptly deliver to Buyer a supplement to the
Disclosure Letter specifying such change. During the same period, each Seller
will promptly notify Buyer of the occurrence of any Breach of any covenant of
Sellers in this Section 5 or of the occurrence of any event that may make the
satisfaction of the conditions in Section 7 impossible or unlikely.
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5.5 PAYMENT OF INDEBTEDNESS BY OR TO RELATED PERSONS
Except as expressly provided in this Agreement, Sellers will cause all
indebtedness owed to the Company by either Seller or any Related Person of
either Seller to be paid in full on or before March 1, 1999. As of the Closing,
each Seller hereby waives any and all indebtedness or other obligations owed to
such Seller, except as set forth on Schedule 5.5 of the Disclosure Letter. The
parties agree that the obligation owed by the Company to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, in an
amount not exceeding $190,000, and the obligation owed by the Company to C\Net:
Solutions, Inc., in an amount not exceeding $347,500, in each case as set forth
on Schedule 5.5 of the Disclosure Letter, shall be paid as follows: (i) 50% of
the principal balance shall be paid within 30 days following the closing of the
transaction in which the Company or an affiliate of Buyer purchases the assets
of Onestop Wireless, Inc. in the OSW/PPC bankruptcy proceeding, wherein the
purchaser in such transaction shall receive cash in the amount of $1,000,000 or
more (the "Onestop Transaction"), and (ii) any principal and accrued interest
not paid prior to June 1, 1999 shall be payable in twelve equal quarterly
payments, commencing on June 1, 1999. In the event the Onestop Transaction
closes after June 1, 1999, within 30 days following such closing, an amount
equal to 50% of the balance of the above obligations shall be paid. In each
case, the above principal balances shall accrue interest at the rate of ten
percent (10%) per annum. The parties also agree that, upon submission of
properly completed expense reports, and in accordance with the usual policies of
the Company, the Sellers shall be reimbursed for outstanding expenses advanced
upon behalf of the Company in an amount not exceeding an aggregate of $15,000.
Such payment shall be made within 30 days following the Closing.
5.6 NO NEGOTIATION
Until such time, if any, as this Agreement is terminated pursuant to Section 9,
Sellers will not, and will cause the Company and each of their Representatives
not to, directly or indirectly solicit, initiate, or encourage any inquiries or
proposals from, discuss or negotiate with, provide any non-public information
to, or consider the merits of any unsolicited inquiries or proposals from, any
Person (other than Buyer) relating to any transaction involving the sale of the
business or assets (other than in the Ordinary Course of Business) of the
Company, or any of the capital stock of the Company, or any merger,
consolidation, business combination, or similar transaction involving the
Company.
5.7 BEST EFFORTS
Between the date of this Agreement and the Closing Date, Sellers will use their
Best Efforts to cause the conditions in Sections 7 and 8 to be satisfied.
SECTION 6. COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 BEST EFFORTS
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Between the date of this Agreement and the Closing Date, Buyer will use its Best
Efforts to cause the conditions in Sections 7 and 8 to be satisfied.
SECTION 7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions required
to be taken by Buyer at the Closing is subject to the satisfaction, at or prior
to the Closing, of each of the following conditions (any of which may be waived
in writing by Buyer, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS
There shall be no breach, violation or inaccuracy of Sellers' representations
and warranties in this Agreement (considered collectively), and there shall be
no breach, violation or inaccuracy of such representations and warranties
(considered individually), as of the date of this Agreement, and as of the
Closing Date as if made on the Closing Date, without giving effect to any
supplement to the Disclosure Letter, which breach, violation or inaccuracy could
reasonably be expected to have a material adverse effect on the business,
results of operations or financial condition of the Company taken as a whole.
7.2 SELLERS' PERFORMANCE
(a) All of the covenants and obligations that Sellers are required to
perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), and each of such covenants and
obligations (considered individually), must have been duly performed
and complied with in all material respects.
(b) Each document required to be delivered pursuant to Section 2.4 must
have been delivered, and each of the other covenants and obligations
in this Agreement must have been performed and complied with in all
respects.
7.3 ADDITIONAL DOCUMENTS
Each of the following documents must have been delivered to Buyer:
(a) such documents as Buyer may reasonably request for the purpose of (i)
evidencing the accuracy of any of Sellers' representations and
warranties, (ii) evidencing the performance by either Seller of, or
the compliance by any Seller with, any covenant or obligation required
to be performed or complied with by such Seller, (iii) evidencing the
satisfaction of any condition referred to in this Section 7, or (iv)
otherwise facilitating the consummation or performance of any of the
Contemplated Transactions.
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7.4 NO PROCEEDINGS
Since the date of this Agreement, there must not have been commenced or
Threatened against Buyer, or against any Person affiliated with Buyer, any
Proceeding (i) involving any challenge to, or seeking damages or other relief
in connection with, any of the Contemplated Transactions, or (ii) that may have
the effect of preventing, delaying, making illegal, or otherwise interfering
with any of the Contemplated Transactions.
7.5 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS
There must not have been made or Threatened by any Person any claim asserting
that such Person (i) is the holder or the beneficial owner of, or has the right
to acquire or to obtain beneficial ownership of, any of the Shares, or any
stock of, or any other voting, equity, or ownership interest in, the Company
that was not issued and outstanding as of December 15, 1998, or that if issued
and outstanding, would cause the number of issued and outstanding shares of the
Common Stock of the Company to exceed 10,100,882, or (ii) is entitled to all or
any portion of the Purchase Price payable for the Shares.
7.6 NO PROHIBITION
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), materially contravene, or conflict with, or result in a material
violation of, or cause Buyer or any Person affiliated with Buyer to suffer any
material adverse consequence under, (i) any applicable Legal Requirement or
Order, or (ii) any Legal Requirement or Order that has been published,
introduced, or otherwise formally proposed by or before any Governmental Body.
SECTION 8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other actions required
to be taken by Sellers at the Closing is subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (any of which may be
waived in writing by Sellers, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS
There shall be no breach, violation or inaccuracy of Buyers' representations
and warranties in this Agreement (considered collectively), and there shall be
no breach, violation or inaccuracy of such representations and warranties
(considered individually), as of the date of this Agreement, and as of the
Closing Date as if made on the Closing Date, which breach, violation or
inaccuracy could reasonably be expected to have a material adverse effect on
the business, results of operations or financial condition of the Buyer (after
giving effect to the transactions contemplated herein) taken as a whole.
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8.2 BUYER'S PERFORMANCE
(a) All of the covenants and obligations that Buyer is required to perform
or to comply with pursuant to this Agreement at or prior to the
Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been performed and
complied with in all material respects.
(b) Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Section 2.4 and must have made the
payments required to be made by Buyer pursuant to Sections 2.2(a) and
2.2(b).
8.3 NO INJUNCTION
There must not be in effect any Legal Requirement or any injunction or other
Order that (i) prohibits the sale of the Shares by Sellers to Buyer, and (ii)
has been adopted or issued, or has otherwise become effective, since the date of
this Agreement.
SECTION 9. TERMINATION
9.1 TERMINATION EVENTS
This Agreement may, by notice given prior to or at the Closing, be terminated:
(a) by either Buyer or Sellers if a material Breach of any provision of
this Agreement has been committed by the other party and such Breach
has not been waived;
(b) (i) by Buyer if any of the conditions in Section 7 has not been
satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
Buyer to comply with its obligations under this Agreement) and Buyer
has not waived such condition on or before the Closing Date; or (ii)
by Sellers, if any of the conditions in Section 8 has not been
satisfied of the Closing Date or if satisfaction of such a condition
is or becomes impossible (other than through the failure of Sellers to
comply with their obligations under this Agreement) and Sellers have
not waived such condition on or before the Closing Date;
(c) by mutual consent of Buyer and Sellers; or
(d) by either Buyer or Sellers if the Closing has not occurred (other than
through the failure of any party seeking to terminate this Agreement
to comply fully with its obligations under this Agreement) on or
before February 1, 1999, or such later date as the parties may agree
upon.
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9.2 EFFECT OF TERMINATION
Each party's right of termination under Section 9.1 is in addition to any other
rights it may have under this Agreement or otherwise, and the exercise of a
right of termination will not be an election of remedies. If this Agreement is
terminated pursuant to Section 9.1, all further obligations of the parties under
this Agreement will terminate, except that the obligations in Sections 11.1 and
11.3 will survive; provided, however, that if this Agreement is terminated by a
party because of the Breach of the Agreement by the other party or because one
or more of the conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the other party's failure to comply
with its obligations under this Agreement, the terminating party's right to
pursue all legal remedies will survive such termination unimpaired.
SECTION 10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL: RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE
All representations, warranties, covenants, and obligations in this Agreement,
the Disclosure Letter, the supplements to the Disclosure letter, and any other
certificate or document delivered pursuant to this Agreement will survive the
Closing; provided, however, that, notwithstanding anything in this Agreement to
the contrary, the representations, warranties and covenants of the Company shall
terminate upon the Closing (but not upon termination). The right to
indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation. The waiver of any condition based on the accuracy of
any representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
Damages, or other remedy based on such representations, warranties, covenants,
and obligations.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
Sellers, jointly and severally, will indemnify and hold harmless Buyer, the
Company, and their respective Representatives, stockholders, controlling
persons, and affiliates (collectively, the "Indemnified Persons") for, and will
pay to the Indemnified Persons the amount of, any loss, liability, claim, damage
(including incidental and consequential damages), expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third-party claim (collectively, "Damages"),
arising, directly or indirectly, from or in connection with:
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(a) any material Breach of any representation or warranty made by
Sellers in this Agreement (without giving effect to any supplement
to the Disclosure Letter), the Disclosure Letter, the supplements to
the Disclosure Letter, or any other certificate or document
delivered by Sellers pursuant to this Agreement;
(b) any Breach by any Seller of any covenant or obligation of such
Seller in this Agreement;
(c) any services provided by the Company prior to the Closing Date;
(d) any litigation, claim or liability existing, made, Threatened, or
arising from, any conduct, action or transaction by the Sellers or
the Company prior to Closing and not reflected on the Balance Sheet;
or
(e) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with any
Seller or the Company (or any Person acting on their behalf) in
connection with any of the Contemplated Transactions.
The remedies provided in this Section 10.2 will not be exclusive of or limit
any other remedies that may be available to Buyer or the other Indemnified
Persons.
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Buyer will indemnify and hold harmless Sellers, and will pay to Sellers the
amount of any Damages arising, directly or indirectly, from or in connection
with (i) any material Breach of any representation or warranty made by Buyer in
this Agreement or in any certificate delivered by Buyer pursuant to this
Agreement, or (ii) any Breach by Buyer of any covenant or obligation of Buyer
in this Agreement.
10.4 LIMITATION ON INDEMNIFICATION
(a) Indemnity Basket. The Buyer shall not have the right to be
indemnified pursuant to Section 10.2 unless and until the Buyer
shall have incurred on a cumulative basis since the Closing Date
aggregate Damages for any of the items set forth in Section 10.2 in
an amount exceeding $100,000, in which event the right to be
indemnified shall apply to all such Damages in excess of $15,000;
provided, however, that this limitation shall not apply to any
Breach of the representations and warranties set forth in Sections
3.1, 3.8, 3.16, 3.18 and 3.21.
(b) The Seller shall not have the right to be indemnified pursuant to
Section 10.3 unless and until the Seller shall have incurred on a
cumulative basis since the Closing Date aggregate Damages for any of
the items set forth in Section 10.3 in
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an amount exceeding $100,000, in which event the right to be
indemnified shall apply to all such Damages in excess of $15,000.
(c) At Buyer's option, any indemnification obligation under this Article
10 may be paid in whole or in part in the form of GAPI Common Stock
at its then Fair Market Value.
10.5 RIGHT OF SET-OFF
Upon notice to Sellers specifying in reasonable detail the basis for such
set-off, Buyer may set off any amount to which it may be entitled under this
Section 10 against amounts otherwise payable to Sellers. The exercise of such
right of set-off by Buyer in good faith, whether or not ultimately determined
to be justified, will not constitute an event of default under this Agreement
or any other agreement between Buyer and any Seller. Neither the exercise of
nor the failure to exercise such right of set-off will constitute an election
of remedies or limit Buyer in any manner in the enforcement of any other
remedies that may be available to it.
10.6 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party under Section 10.2 or
Section 10.3 of notice of the commencement of any Proceeding against
it, such indemnified party will, if a claim is to be made against an
indemnifying party under such Section, give notice to the
indemnifying party of the commencement of such claim, but the
failure to notify the indemnifying party will not relieve the
indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party
demonstrates that the defense of such action is prejudiced by the
indemnifying party's failure to give such notice.
(b) If any Proceeding referred to in Section 10.5(a) is brought against
an indemnified party and it gives notice to the indemnifying party
of the commencement of such Proceeding, the indemnifying party will,
unless the claim involves Taxes, be entitled to participate in such
Proceeding and, to the extent that it wishes (unless (i) the
indemnifying party is also a party to such Proceeding and the
indemnified party determines in good faith that joint representation
would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its
financial capacity to defend such Proceeding (with counsel of
national standing and reasonably satisfactory to the indemnified
party) and provide indemnification with respect to such Proceeding),
to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying
party to the indemnified party of its election to assume the defense
of such Proceeding, the indemnifying party will not, as long as it
diligently conducts such defense, be liable to the indemnified party
under this Section 10 for any fees of other counsel or any other
expenses with respect to the defense of such Proceeding, in each
case subsequently incurred by the
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indemnified party in connection with the defense of such
Proceeding, other than reasonable costs of investigation. If
the indemnifying party assumes the defense of a Proceeding
(which shall be conclusively established by such indemnifying
party answering any complaint or otherwise appearing in any
court with jurisdiction over such matter), (i) it will be
conclusively established for purposes of this Agreement that
the claims made in that Proceeding are within the scope of and
subject to indemnification; (ii) no compromise or settlement of
such claims may be effected by the indemnifying party without
the indemnified party's consent unless (1) there is no finding
or admission of any violation of Legal Requirements or any
violation of the rights of any Person and no effect on any
other claims that may be made against the indemnified party,
and (2) the sole relief provided is monetary damages that are
paid in full by the indemnifying party; and (iii) the
indemnified party will have no liability with respect to any
compromise or settlement of such claims effected without its
consent. If notice is given to an indemnifying party of the
commencement of any Proceeding and the indemnifying party does
not, within ten days after the indemnified party's notice is
given, give notice to the indemnified party of its election to
assume the defense of such Proceeding with counsel of national
standing and reasonably satisfactory to the indemnified party,
the indemnifying party will be bound by any determination made
in such Proceeding or any compromise or settlement effected by
the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability
that a Proceeding may adversely affect it or its affiliates
other than as a result of monetary damages for which it would
be entitled to indemnification under this Agreement, the
Indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle
such Proceeding.
(d) Sellers hereby consent to the non-exclusive jurisdiction of any
court in which a Proceeding is brought against any Indemnified
Person for purposes of any claim that an Indemnified Person may
have under this Agreement with respect to such Proceeding or
the matters alleged therein, and agree that process may be
served on Sellers with respect to such a claim anywhere in the
world.
10.7 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS
A claim for indemnification for any matter not involving a third-party claim may
be asserted by notice to the party from whom indemnification is sought.
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SECTION 11. GENERAL PROVISIONS
11.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party to this
Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants. In the event of termination of this Agreement, the
obligation of each party to pay its own expenses will be subject to any rights
of such party arising from a breach of this Agreement by another party.
11.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this Agreement or
the Contemplated Transactions will be issued, if at all, at such time and in
such manner as Buyer determines. Unless consented to by Buyer in advance or
required by Legal Requirements, prior to the Closing Sellers shall, and shall
cause the Company to, keep this Agreement strictly confidential and may not make
any disclosure of this Agreement to any Person. Sellers and Buyer will consult
with each other concerning the means by which the Company's employees,
customers, and suppliers and others having dealings with the Company will be
informed of the Contemplated Transactions, and Buyer will have the right to be
present for any such communication.
11.3 CONFIDENTIALITY
Between the date of this Agreement and the Closing Date, Buyer and Sellers will
maintain in confidence, and will cause the directors, officers, employees,
agents, and advisors of Buyer and the Company to maintain in confidence, and not
use to the detriment of another party or the Company any written, oral, or other
information obtained in confidence from another party or the Company in
connection with the Agreement or the Contemplated Transactions, unless (i) such
information is already known to such party or to others not bound by a duty of
confidentiality or such information is necessary or appropriate in making any
filing or obtaining any consent or approval required for the consummation of the
Contemplated Transactions, or (iii) the furnishing or use of such information is
required by legal proceedings.
If the Contemplated Transactions are not consummated, each party will return or
destroy as much of such written information as the other party may reasonably
request. Whether or not the Closing takes place, Sellers waive, and will upon
Buyer's request cause the Company to waive, any cause of action, right, or claim
arising out of the access of Buyer or its representatives to any trade secrets
or other confidential information of the Company except for the intentional
competitive misuse by buyer of such trade secrets or confidential information.
11.4 NOTICES
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All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (i)
delivered by hand (with written confirmation of receipt), (ii) sent by
telecopier (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (iii) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Sellers or the Company:
c/o ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
PhoneXchange, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Buyer:
Global Access Pagers, Inc.
c/o Corporate Financial Enterprises, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
11.5 JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based on any
right arising out of, this Agreement may be brought against any of the parties
in the courts of the State of California, County of Los Angeles, or, if it has
or can acquire jurisdiction, in the United States District Court for the
Central District of California, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid
therein. Process in any action or proceeding referred to in the preceding
sentence may be served on any party anywhere in the world.
11.6 FURTHER ASSURANCES
The parties agree (i) to furnish upon request to each other such further
information, (ii) to execute and deliver to each other such other documents,
and (iii) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
11.7 WAIVER
36
41
The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or privilege, and
no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or
the exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (i) no claim or right arising out of this
Agreement or the documents referred to in this Agreement can be discharged by
one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (ii) no waiver that may be
given by a party will be applicable except in the specific instance for which
it is given; and (iii) no notice to or demand on one party will be deemed to be
a waiver of any obligation of such party or of the right of the party giving
such notice of demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
11.8 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties with respect
to its subject matter (including the Letter or Intent between Buyer and Sellers
dated December 10, 1998) and constitutes (along with the documents referred to
in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the
party to be charged with the amendment.
11.9 DISCLOSURE LETTER.
(a) The disclosures in the Disclosure Letter, and those in any Supplement
thereto, must relate only to the representations and warranties in the
Section of the Agreement to which they expressly relate and not to any
other representations or warranty in this Agreement.
(b) In the event of any inconsistency between the statements in the body
of this Agreement and those in the Disclosure Letter (other than an
exception expressly set forth as such in the Disclosure Letter with
respect to a specifically identified representation or warranty), the
statements in the body of this Agreement will control.
11.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Seller may not assign any of its rights under this Agreement without the prior
consent of the Buyer. Subject to the preceding sentence, this Agreement will
apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any Person other than the
parties to this Agreement any legal or equitable right, remedy, or claim under
or with respect to this Agreement or any provision of this Agreement. This
Agreement and all of its provisions and
37
42
conditions are for the sole and exclusive benefit of the parties to this
Agreement and their permitted successors and assigns.
11.11 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.
11.12 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references to "Section"
or "Sections" refer to the corresponding Section or Sections of this Agreement.
All words used in this Agreement will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided, the
word "including" does not limit the preceding words or terms.
11.13 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
11.14 GOVERNING LAW
This Agreement will be governed by the laws of the State of California without
regard to conflicts of laws principles.
11.15 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
38
43
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.
BUYER
GLOBAL ACCESS PAGERS, INC.,
a Nevada corporation
/s/ [signature illegible]
---------------------------
SELLERS:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇
---------------------------
▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇
---------------------------
▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
44
Exhibit 2.4(a)(ii)
RELEASE
This Release is being executed and delivered in accordance with Section
2.4(a)(ii) of the Stock Purchase Agreement dated as of January 1, 1999 (the
"Agreement") between Global Access Pagers, Inc., a Nevada corporation ("Buyer")
and PhoneXchange, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇
("Sellers"). Capitalized terms used in this Release without definition have the
respective meanings given to them in the Agreement.
Each Seller acknowledges that execution and delivery of this Release is a
condition to Buyer's obligation to purchase the Shares pursuant to the
Agreement and that Buyer is relying on this Release in consummating such
purchase.
1. Each Seller, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged and intending to be legally
bound, in order to induce Buyer to purchase the Shares pursuant to the
Agreement, hereby agrees as follows:
2. Except as set forth below, each Seller, on behalf of himself and each
of his Related Persons, hereby releases and forever discharges the
Buyer and the Company, and each of their respective individual, joint
or mutual, past, present and future Representatives, affiliates,
stockholders, controlling persons, Subsidiaries, successors and assigns
(individually, a "Releasee" and collectively, "Releasees") from any and
all claims, demands, Proceedings, causes of action, Orders,
obligations, contracts, agreements, debts and liabilities whatsoever,
whether known or unknown, suspected or unsuspected, both at law and in
equity, which each of the Sellers or any of their respective Related
Persons now has, have ever had or may hereafter have against the
respective Releasees arising contemporaneously with or prior to the
Closing Date, including, but not limited to, any rights to
indemnification or reimbursement from the Company, whether or not
relating to claims pending on, or asserted after, the Closing Date;
provided, however, that nothing contained herein shall operate to
release any obligations of Buyer arising under or reflected in the
Agreement (including, without limitation, those obligations of the
Company set forth in Schedule 5.5 of the Disclosure Letter) and the
Employment Agreements with each of the Sellers.
3. Each Seller hereby waives the provisions of Section 1542 of the
California Civil Code, which provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS
1
45
released hereby.
1. Without in any way limiting any of the rights and remedies otherwise
available to any Releasee, each Seller, jointly and severally, shall
indemnify and hold harmless each Releasee from and against all loss,
liability, claim, damage (including incidental and consequential
damages) or expense (including costs of investigation and defense and
reasonable attorney's fees) whether or not involving third party
claims, arising directly or indirectly from or in connection with (i)
the assertion by or on behalf of the Sellers or any of their Related
Persons of any claim or other matter purported to be released pursuant
to this Release and (ii) the assertion by any third party of any claim
or demand against any Releasee which claim or demand arises directly or
indirectly from, or in connection with, any assertion by or on behalf
of the Sellers or any of their Related Persons against such third party
of any claims or other matters purported to be released pursuant to
this Release.
1. If any provision of this Release is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this
Release will remain in full force and effect. Any provision of this
Release held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or
unenforceable.
1. This Release may not be changed except in a writing signed by the
person(s) against whose interest such change shall operate. This
Release shall be governed by and construed under the laws of the State
of California without regard to principles of conflicts of law.
1. All words used in this Release will be construed to be of such gender or
number as the circumstances require.
IN WITNESS WHEREOF, each of the undersigned have executed and delivered this
Release as of this 1st day of January, 1999
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------------- ----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------- ----------------------------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
2
46
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (this "Agreement") is made as of January 1, 1999,
by and between Global Access Pagers, Inc., a Nevada corporation ("Buyer"), and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ (each, a "Seller").
RECITALS
Concurrently with the execution and delivery of this Agreement, Buyer is
purchasing from Seller and certain other individuals approximately 8,600,000
shares (the "Shares") of common stock, of PhoneXchange, Inc. (the "Company"),
including all of the shares of such Common Stock owned by Seller, pursuant to
the terms and conditions of a stock purchase agreement made as of January 1,
1999 (the "Stock Purchase Agreement"). Section 2.4(a)(iv) of the Stock Purchase
Agreement requires that noncompetition agreements be executed and delivered by
each of Seller as a condition to the purchase of the Shares by Buyer.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
Capitalized terms not expressly defined in this Agreement shall have the
meanings ascribed to them in the Stock Purchase Agreement.
2. ACKNOWLEDGMENTS BY SELLER
Seller acknowledges that (a) Seller has occupied a position of trust and
confidence with the Company prior to the date hereof and has become familiar
with the following, any and all of which constitute confidential information of
the Company, (collectively the "Confidential Information"): (i) any and all
trade secrets concerning the business and affairs of the Company, product
specifications, data, know-how, formulae, compositions, processes, designs,
sketches, photographs, graphs, drawings, samples, inventions and ideas, past,
current and planned research and development, current and planned manufacturing
and distribution methods and processes, customer lists, current and anticipated
customer requirements, price lists, market studies, business plans, computer
software and programs (including object code and source code), computer software
and database technologies, systems, structures and architectures (and related
processes, formulae, compositions, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information) of the Company
and any other information, however documented, of the Company that is a trade
secret within the meaning of California law; (ii) any and all information
concerning the business and affairs of the Company (which includes historical
financial statements, financial projections and budgets, historical and
projected sales, capital spending budgets and plans, the names and backgrounds
of key personnel, personnel training and techniques and materials, and various
corporate projects and opportunities), however documented; and (iii) any and all
notes, analysis, compilations, studies, summaries, and other
47
material prepared by or for the Company containing or based, in whole or in
part, on any information included in the foregoing, (b) the business of the
Company is international in scope, (c) its products and services are marketed
throughout the World; (d) the Company competes with other businesses that are or
could be located in any part of the World; (e) Buyer has required that Seller
make the covenants set forth in Sections 3 and 4 of this Agreement as a
condition to the Buyer's purchase of the Shares owned by Seller; (f) the
provisions of Sections 3 and 4 of this Agreement are reasonable and necessary to
protect and preserve the Company's business, and (g) the Company would be
irreparably damaged if Seller were to breach the covenants set forth in Sections
3 and 4 of this Agreement.
3. CONFIDENTIAL INFORMATION
Seller acknowledges and agrees that all Confidential Information known or
obtained by Seller, whether before or after the date hereof, is the property of
the Company. Therefore, Seller agrees that Seller will not, at any time,
disclose to any unauthorized Persons or use for his own account or for the
benefit of any third party any Confidential Information, whether Seller has such
information in Seller's memory or embodied in writing or other physical form,
without Buyer's written consent, unless and to the extent that the Confidential
Information is or becomes generally known to and available for use by the public
other than as a result of Seller's fault or the fault of any other Person bound
by a duty of confidentiality to Buyer or the Company. Seller agrees to deliver
to Buyer at any time Buyer may request, all documents, memoranda, notes, plans,
records, reports, and other documentation, models, components, devices, or
computer software, whether embodied in a disk or in other form (and all copies
of all of the foregoing), relating to the businesses, operations, or affairs of
the Company and any other Confidential Information that Seller may then possess
or have under Seller's control.
4. NONCOMPETITION
As an inducement for Buyer to enter into the Stock Purchase Agreement and as
additional consideration for the consideration to be paid to Seller under the
Stock Purchase Agreement, Seller agrees that:
a. For a period of five years after the Closing:
i. Seller will not, directly or indirectly, engage or invest in,
own, manage, operate, finance, control, or participate in the
ownership, management, operation, financing, or control of, be
employed by, associated with, or in any manner connected with, or
render services or advice to, any business whose products or
activities compete in whole or in part with the products or
activities of the Company or any affiliate of the Company
(including Buyer), anywhere within the United States; provided,
however, that Seller may purchase or otherwise acquire up to (but
not more than) 4.99 percent of any class of securities of any
enterprise (but without otherwise participating in the activities
of such enterprise) if such securities are listed on any national
or regional securities exchange or have been registered
48
under Section 12(g) of the Securities Exchange Act of 1934; provided,
further, that this provision shall not apply to any interest or
investment in any business owned by Seller as of January 1, 1999 as
long as (i) any activity associated with, or business time of
Executive devoted to, such investment does not materially interfere
with Seller's duties under any employment agreement or relationship
with the Company or any affiliate of the Company (including Buyer),
(ii) no Confidential Information is used by Seller or such business,
or disclosed to any employee, officer or director of such business,
to the benefit of such business or the material detriment of the
Company or any affiliate of the Company (including Buyer), and (iii)
the business or activities conducted by such business does not
materially change from the business or activities conducted by such
business as of January 1, 1999, which change would cause such
business to compete more directly and materially with the Company or
any affiliate of the Company (including Buyer). Seller agrees that
this covenant is reasonable with respect to its duration,
geographical area, and scope.
ii. Seller will not, directly or indirectly, either for himself or any
other Person, (A) induce or attempt to induce any employee of the
Company or any affiliate of the Company (including Buyer) to leave
the employ of the Company or any affiliate of the Company (including
Buyer), (B) in any way interfere with the relationship between the
Company or any affiliate of the Company (including Buyer) and any
employee of the Company or any affiliate of the Company (including
Buyer), (C) employ, or otherwise engage as an employee, independent
contractor, or otherwise, any employee of the Company or any
affiliate of the Company (including Buyer), or (D) induce or attempt
to induce any customer, supplier, licensee, or business relation of
the Company or any affiliate of the Company (including Buyer) to
cease doing business with the Company or any affiliate of the Company
(including Buyer), or in any way interfere with the relationship
between any customer, supplier, licensee, or business relation of the
Company or any affiliate of the Company (including Buyer).
iii. Seller will not, directly or indirectly, either for himself or any
other Person, solicit the business of any Person known to Seller to
be a customer of the Company or any affiliate of the Company
(including Buyer), whether or not Seller had personal contact with
such Person, with respect to products or activities which compete in
whole or in part with the products or activities of the Company;
b. In the event of a breach by Seller of any covenant set forth in Subsection
4(a) of this Agreement, the term of such covenant will be extended by the
period of the duration of such breach;
49
c. Seller will not, at any time during or after the five year period,
disparage Buyer or the Company, or any of their affiliates,
shareholders, directors, officers, employees, or agents; and
d. Seller will, for a period of five years after the Closing, within ten
days after accepting any employment, advise Buyer of the identity of
any employer of Seller. Buyer or the Company may serve notice upon
each such employer that Seller is bound by this Agreement and furnish
each such employer with a copy of this Agreement or relevant portions
thereof.
5. REMEDIES
If Seller breaches the covenants set forth in Sections 3 or 4 of this Agreement,
Buyer and the Company will be entitled to the following remedies:
a. Damages from Seller:
b. To offset against any and all amounts owing to Seller under the Stock
Purchase Agreement any and all amounts which Buyer or the Company
claim under Subsection 6(a) of this Agreement; and
c. In addition to its right to damages and any other rights it may have,
to obtain injunctive or other equitable relief to restrain any breach
or threatened breach or otherwise to specifically enforce the
provisions of Sections 3 and 4 of this Agreement, it being agreed
that money damages alone would be inadequate to compensate the Buyer
and the Company and would be an inadequate remedy for such breach.
d. The rights and remedies of the parties to this Agreement are
cumulative and not alternative.
6. SUCCESSORS AND ASSIGNS
This Agreement will be binding upon Buyer, the Company and Seller and will
inure to the benefit of Buyer and the Company and their affiliates, successors
and assigns and Seller and Seller's assigns, heirs and legal representatives.
7. WAIVER
The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement will operate as a waiver of
such right, power, or privilege, and no single or partial exercise of any such
right, power, or privilege will preclude any other or further exercise of such
right, power, or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement can be
50
discharged by one party, in whole or in part, by a waiver or renunciation of
the claim or right unless in writing signed by the other party; (b) no waiver
that may be given by a party will be applicable except in the specific instance
for which it is given; and (c) no notice to or demand on one party will be
deemed to be a waiver of any obligation of such party or of the right of the
party giving such notice or demand to take further action without notice or
demand as provided in this Agreement.
8. GOVERNING LAW
This Agreement will be governed by the laws of the State of California without
regard to conflicts of laws principles.
9. JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based on any
right arising out of, this Agreement may be brought against any of the parties
in the courts of the State of California, County of Los Angeles, or, if it has
or can acquire jurisdiction, in the United States District Court for the
Central District of California, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may
be served on any party anywhere in the world.
10. SEVERABILITY
Whenever possible each provision and term of this Agreement will be interpreted
in a manner to be effective and valid but if any provision or term of this
Agreement is held to be prohibited by or invalid, then such provision or term
will be ineffective only to the extent of such prohibition or invalidity,
without invalidating or affecting in any manner whatsoever the remainder of
such provision or term or the remaining provisions or terms of this Agreement.
If any of the covenants set forth in Section 4 of this Agreement are held to be
unreasonable, arbitrary, or against public policy, such covenants will be
considered divisible with respect to scope, time and geographic area, and in
such lesser scope, time and geographic area, will be effective, binding and
enforceable against Seller.
11. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same Agreement.
12. SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience only
and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement unless otherwise specified. All words used
51
in this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
13. NOTICES
All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt, (b) sent by facsimile (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and facsimile numbers set forth in the
Stock Purchase Agreement (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties):
14. ENTIRE AGREEMENT
This Agreement, the Employment Agreement between the parties, and the Stock
Purchase Agreement constitute the entire agreement between the parties with
respect to the subject matter of this Agreement and supersede all prior written
and oral agreements and understandings between Buyer and Seller with respect to
the subject matter of this Agreement. This Agreement may not be amended except
by a written agreement executed by the party to be charged with the amendment.
15. SPECIAL TERMINATION
In the event that the value of the Shares received by Sellers at the Closing and
any shares issuable pursuant to the ??? Payments, in each case pursuant to
Section 2.2 of the Stock Purchase Agreement, is less than ??60,000 upon
termination of the Employment Agreement of any Seller, for any reason, then at
such Seller's option, the Buyer will release the Seller from all obligations
under this Agreement upon the tender by such Seller of all shares received by
such Seller pursuant to Section 2.2 in the Stock Purchase Agreement.
52
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as
of the date first written above.
BUYER:
GLOBAL ACCESS PAGERS,INC.
a Nevada corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------
SELLERS:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇
------------------------------------------
▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
53
SEE RESTRICTIVE LEGEND ON REVERSE SIDE SHARES
NUMBER -5,050,000-
1749
CUSIP 71921R 10 7
SEE REVERSE
FOR CERTAIN DEFINITIONS
phoneXchange
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
50,000,000 AUTHORIZED SHARES $.001 PAR VALUE
THIS CERTIFIES THAT ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ *5,050,000*****
**5,050,000****
Is The Owner of ***FIVE MILLION FIFTY THOUSAND*** ***5,050,000***
****5,050,000**
*****5,050,000*
FULLY PAID AND NON-ASSESSABLE SHARES OF $.001 PAR VALUE COMMON STOCK OF
phoneXchange, Inc.
transferable only on the books of the Company in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid unless countersigned by the Transfer Agent and Registrar.
IN WITNESS WHEREOF, the said Company has caused this Certificate to be executed
by the facsimile signatures of its duly authorized officers and to be sealed
with the facsimile seal of the Company.
Dated: 06/16/1998
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
SECRETARY PRESIDENT
phoneXchange, Inc.
CORPORATE
SEAL
DELAWARE
COUNTERSIGNED AND REGISTERED:
American Securities Transfer & Trust, Inc.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
By /s/ [Signature Illegible]
-----------------------------------------------
Transfer Agent & Registrar Authorized Signature
54
phoneXchange, Inc.
TRANSFER FEE: $20.00 PER NEW CERTIFICATE ISSUED
The following abbreviations when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ......Custodian........
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act .............................
in common (State)
Additional abbreviations may also be used though not in the above list.
________________________________________________________________________________
For Value Received, ____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________ Shares
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _____________________ attorney-in-fact to
transfer the said stock on the books of the within-named Corporation, with full
power of substitution in the premises.
Dated _____________________________
----------------------------------------------------------------------
----------------------------------------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATSOEVER.
Signature(s) Guaranteed:
________________________________________
The signature(s) must be guaranteed by an eligible guarantor institution (Banks,
Stockbrokers, Savings and Loan Associations and Credit Unions with membership
in an approved signature guarantee Medallion Program), pursuant to S.E.C. Rule
17Ad-15.
The shares represented by this Certificate have not been
registered under the Securities Act of 1933 ("the Act") and
are "restricted securities" as that term is defined in Rule
144 under the Act. The shares may not be offered for sale,
sold or otherwise transferred except pursuant to an effective
registration statement under the Act, or pursuant to an
exemption from registration under the Act, the availability
of which is to be established to the satisfaction of the
Company.
55
SEE RESTRICTIVE LEGEND ON REVERSE SIDE SHARES
NUMBER -150,000-
1752
CUSIP 71921R 10 7
SEE REVERSE
FOR CERTAIN DEFINITIONS
phoneXchange
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
50,000,000 AUTHORIZED SHARES $.001 PAR VALUE
THIS CERTIFIES THAT ▇▇▇▇ ▇▇▇▇▇▇▇▇ *150,000*******
**150,000******
Is The Owner of ***ONE HUNDRED FIFTY THOUSAND*** ***150,000*****
****150,000****
*****150,000***
FULLY PAID AND NON-ASSESSABLE SHARES OF $.001 PAR VALUE COMMON STOCK OF
phoneXchange, Inc.
transferable only on the books of the Company in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid unless countersigned by the Transfer Agent and Registrar.
IN WITNESS WHEREOF, the said Company has caused this Certificate to be executed
by the facsimile signatures of its duly authorized officers and to be sealed
with the facsimile seal of the Company.
Dated: 06/16/1998
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
SECRETARY PRESIDENT
phoneXchange, Inc.
CORPORATE
SEAL
DELAWARE
COUNTERSIGNED AND REGISTERED:
American Securities Transfer & Trust, Inc.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
By /s/ [Signature Illegible]
-----------------------------------------------
Transfer Agent & Registrar Authorized Signature
56
phoneXchange, Inc.
TRANSFER FEE: $20.00 PER NEW CERTIFICATE ISSUED
The following abbreviations when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ......Custodian........
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act .............................
in common (State)
Additional abbreviations may also be used though not in the above list.
________________________________________________________________________________
For Value Received, ____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
The shares represented by this Certificate have not been
registered under the Securities Act of 1933 ("the Act") and
are "restricted securities" as that term is defined in Rule 144
under the Act. The shares may not be offered for sale, sold or
otherwise transferred except pursuant to an effective registration
statement under the Act, or pursuant to an exemption from registration
under the Act, the availability of which is to be established to the
satisfaction of the Company.
_________________________________________________________________________ Shares
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _____________________ attorney-in-fact to
transfer the said stock on the books of the within-named Corporation, with full
power of substitution in the premises.
Dated _____________________________
/s/ [Signature Illegible]
----------------------------------------------------------------------
----------------------------------------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATSOEVER.
Signature(s) Guaranteed:
________________________________________
The signature(s) must be guaranteed by an eligible guarantor institution (Banks,
Stockbrokers, Savings and Loan Associations and Credit Unions with membership
in an approved signature guarantee Medallion Program), pursuant to S.E.C. Rule
17Ad-15.
57
SEE RESTRICTIVE LEGEND ON REVERSE SIDE SHARES
NUMBER -2,000,000-
1077
CUSIP 71921R 10 7
SEE REVERSE
FOR CERTAIN DEFINITIONS
phoneXchange
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
50,000,000 AUTHORIZED SHARES $.001 PAR VALUE
THIS CERTIFIES THAT ▇▇▇▇▇ ▇▇▇▇ *2,000,000*****
**2,000,000****
Is The Owner of ***TWO MILLION*** ***2,000,000***
****2,000,000**
*****2,000,000*
FULLY PAID AND NON-ASSESSABLE SHARES OF $.001 PAR VALUE COMMON STOCK OF
phoneXchange, Inc.
transferable only on the books of the Company in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid unless countersigned by the Transfer Agent and Registrar.
IN WITNESS WHEREOF, the said Company has caused this Certificate to be executed
by the facsimile signatures of its duly authorized officers and to be sealed
with the facsimile seal of the Company.
Dated: 06/15/1998
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
SECRETARY PRESIDENT
phoneXchange, Inc.
CORPORATE
SEAL
DELAWARE
COUNTERSIGNED AND REGISTERED:
American Securities Transfer & Trust, Inc.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
By /s/ [Signature Illegible]
-----------------------------------------------
Transfer Agent & Registrar Authorized Signature
58
phoneXchange, Inc.
TRANSFER FEE: $20.00 PER NEW CERTIFICATE ISSUED
The following abbreviations when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ......Custodian........
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act .............................
in common (State)
Additional abbreviations may also be used though not in the above list.
________________________________________________________________________________
For Value Received, ____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
###-##-####
--------------------------------------
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________ Shares
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _____________________ attorney-in-fact to
transfer the said stock on the books of the within-named Corporation, with full
power of substitution in the premises.
Dated _____________________________
/s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------------------------------------------------
----------------------------------------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATSOEVER.
Signature(s) Guaranteed:
________________________________________
The signature(s) must be guaranteed by an eligible guarantor institution (Banks,
Stockbrokers, Savings and Loan Associations and Credit Unions with membership
in an approved signature guarantee Medallion Program), pursuant to S.E.C. Rule
17Ad-15.
The shares represented by this Certificate have not been
registered under the Securities Act of 1933 ("the Act") and
are "restricted securities" as that term is defined in Rule 144
under the Act. The shares may not be offered for sale, sold or
otherwise transferred except pursuant to an effective registration
statement under the Act, or pursuant to an exemption from registration
under the Act, the availability of which is to be established to the
satisfaction of the Company.
59
SEE RESTRICTIVE LEGEND ON REVERSE SIDE SHARES
NUMBER -1,000,000-
1054
CUSIP 71921R 10 7
SEE REVERSE
FOR CERTAIN DEFINITIONS
phoneXchange
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
50,000,000 AUTHORIZED SHARES $.001 PAR VALUE
THIS CERTIFIES THAT ▇▇▇▇ ▇▇▇▇ *1,000,000*****
**1,000,000****
Is The Owner of ***ONE MILLION*** ***1,000,000***
****1,000,000**
*****1,000,000*
FULLY PAID AND NON-ASSESSABLE SHARES OF $.001 PAR VALUE COMMON STOCK OF
phoneXchange, Inc.
transferable only on the books of the Company in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid unless countersigned by the Transfer Agent and Registrar.
IN WITNESS WHEREOF, the said Company has caused this Certificate to be executed
by the facsimile signatures of its duly authorized officers and to be sealed
with the facsimile seal of the Company.
Dated: 06/15/1998
/S/ ▇▇▇▇▇ ▇. ▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
SECRETARY PRESIDENT
phoneXchange, Inc.
CORPORATE
SEAL
DELAWARE
COUNTERSIGNED AND REGISTERED:
American Securities Transfer & Trust, Inc.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
By /s/ [Signature Illegible]
-----------------------------------------------
Transfer Agent & Registrar Authorized Signature
60
phoneXchange, Inc.
TRANSFER FEE: $20.00 PER NEW CERTIFICATE ISSUED
The following abbreviations when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ......Custodian........
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act .............................
in common (State)
Additional abbreviations may also be used though not in the above list.
________________________________________________________________________________
For Value Received, ____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
###-##-####
--------------------------------------
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________ Shares
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _____________________ attorney-in-fact to
transfer the said stock on the books of the within-named Corporation, with full
power of substitution in the premises.
Dated _____________________________
/s/ ▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------------------------------------
----------------------------------------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATSOEVER.
Signature(s) Guaranteed:
________________________________________
The signature(s) must be guaranteed by an eligible guarantor institution (Banks,
Stockbrokers, Savings and Loan Associations and Credit Unions with membership
in an approved signature guarantee Medallion Program), pursuant to S.E.C. Rule
17Ad-15.
The shares represented by this Certificate have not been
registered under the Securities Act of 1933 ("the Act") and
are "restricted securities" as that term is defined in Rule 144
under the Act. The shares may not be offered for sale, sold or
otherwise transferred except pursuant to an effective registration
statement under the Act, or pursuant to an exemption from registration
under the Act, the availability of which is to be established to the
satisfaction of the Company.