<PAGE>1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington,
D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 3, 1998
Casino Journal Publishing Group, Inc.
(formerly Gaming Venture Corp., U.S.A.
Exact name of Registrant as specified in its charter)
NEVADA 22-3378922
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
177 Main Street, Suite 312, Fort Lee, NJ 07024
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 927-4642
<PAGE>2
Item 1. Changes in Control of Registrant
Item 2. Acquisition or Disposition of Assets. On April 3, 1998, the
Company and its combined affiliates merged with Gaming Venture Corp., U.S.A.,
A Nevada corporation ("Gaming"). The Company and its combined affiliates
became wholly-owned subsidiaries of Gaming, the legal acquiror. As the
Company's and its combined affiliates' shareholders acquired approximately
65% of Gaming's outstanding voting shares, the merger was accounted for as a
reverse acquisition of Gaming by the Company, the accounting acquiror in the
transaction.
The total cost of the acquisition was #3,331,235, consisting of the purchase
price of #3,217,468, measure by the 1,608,734 common shares retained by the
Gaming's shareholders at their fair value at the closing date of $2.00 per
share, plus transaction costs of $113,767.
Item 3. Bankruptcy or Receivership. None.
Item 4. Changes in Registrant's Certifying Accountant. No.
Item 5. Other Events. None.
Item 6. Resignation of Registrant's Directors. None.
<PAGE>3
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES - NOTE
1
CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets___
Cash and cash equivalents $1,176,841__
Accounts receivable 779,703__
Investment in marketable securities 58,240__
Inventories_ 34,779_
Loans receivable, employees 7,763__
Prepaid expenses 288,726_____
----------
Total current assets 2,346,052_____
Property and equipment - at cost,
less accumulated depreciation_ 264,991____
Other investments_ 1,093,505__
Goodwill_ 1,335,767__
Loan receivable, shareholders and related parties 564,655__
Other assets 46,337______
----------
$5,651,307_____
==========
LIABILITIES AND SHAREHOLDERS' EQUITY_____
Current liabilities__
Note payable_ $200,000__
Accounts payable 1,208,480__
Current portion of deferred
subscription revenues 771,194__
Deferred income, trade show 206,260_
_Loan payable, automobile 3,916____
---------
Total current liabilities 2,389,850____
---------_
Deferred subscription revenues,
less current portion 478,190____
---------_
Minority interest in American gaming Summit, LLC 30,557_____
---------
Shareholders' equity___
Common stock_ 4,609__
Additional paid-in capital 3,241,425__
Accumulated deficit (493,324)
---------
2,752,710
---------
$5,651,307_
=========
</TABLE>
See accompanying notes to financial statements
<PAGE>4
CASINO JOURNAL PUBLISHING GROUP, INC. AND AFFILIATES - NOTE 1
COMBINED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
_ 1998 1997
<S> <C> <C>
______
Revenues_ $2,080,334 $1,680,204______
Direct costs 1,153,209 780,430
---------- ----------______
Gross profit_ 927,125 899,774_____
_General and administrative expenses 1,087,470 780,567
---------- ----------______
Income (loss) from operations (160,345) 119,207______
Other expenses_ (24,151) (31,067)_
---------- ----------____
_Net income (loss) $(184,496) $88,140_
========== ==========________
_Pro forma income data (unaudited)____
Income before income taxes, as reported_ $88,140__
Pro forma income taxes 13,000
-------_____
_Pro forma net income $75,140_
=======_____
Basic and diluted income per share (pro forma) $.03_
=======____
_Shares used in the calculation of income per share 3,000,000__
=========
</TABLE>
See accompanying notes to financial statements
<PAGE>5
CASINO JOURNAL PUBLISHING GROUP, INC. AND AFFILIATES - NOTE
1
COMBINED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>__
Cash flows from operating activities____
Net income (loss) $(84,496) $88,140__
Adjustments to reconcile net income (loss) to net cash____
provided by (used in) operating activities____
Depreciation and amortization_ 13,998_ 10,957__
Minority interest in earnings of American ____
Gaming Summit, LLC_ 739 _2,154__
Changes in assets and liabilities____
accounts receivable_ 131,063_ (23,457)__
Inventories_ (1,254)_ -__
prepaid expenses_ (283,015)_ (17,025)__
organization costs_ -_ (1,098)__
other assets _(95,948)_ (35,903)__
accounts payable_ 74,386_ (142,889)__
deferred revenues _254,421_ 215,626______
------- -------
Net cash provided by (used in) operating activities_ (90,106) _96,505______
------- -------
Cash flows from investing activities____
Loans receivable, shareholders and related parties_ (184,333)_ (26,873)__
loans receivable, employees_ (1,102)_ 4,752__
Additions to property and equipment (42,111) _(12,436)__
Investments in marketable securities_ 232 _- ______
------- -------
Net cash used in investing activities_ (227,314)_ (34,557)______
------- --------
Cash flows from financing activities
Notes payable_ 200,000_ (46,907)__
Principal payments on loan payable, automobile_ (5,109) _-__
Dividends paid_ (62,350)_ (90,000)__
Dividends paid to minority interest_ - (20,000)_____
------- --------
_Net cash provided by (used in) financing activities_ 132,541_ (156,907)_____
-------- --------
Net decrease in cash and cash equivalents_ (184,879)_ (94,959)_____
Cash and cash equivalents, beginning of period_ 334,355_ 412,546______
------- -------
Cash and cash equivalents, end of period_ $149,476_ $317,587_____
======== ========
Supplemental cash flow disclosures___
_Interest paid_ $10,027_ $7,850_
_ ======== ========
</TABLE>
See accompanying notes to financial statement
<PAGE>6
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Acquisition
On April 3, 1998, the Company and its combined affiliates merged with Gaming
Venture Corp., U.S.A., a Nevada corporation ("Gaming"). The Company and its
combined affiliates became wholly-owned subsidiaries of Gaming, the legal
acquiror. As the Company's and its combined affiliates' shareholders
acquired approximately 65% of Gaming's outstanding voting shares, the merger
was accounted for as a reverse acquisition of Gaming by the Company, the
accounting acquiror in the transaction.
The total cost of the acquisition was $3,331,235, consisting of the purchase
price of $3,217,468, measured by the 1,608,734 common shares retained by
Gaming's shareholders at their fair value at the closing date of $2.00 per
share, plus transaction costs of $113,767.
Simultaneous with the acquisition, Gaming changed its name to Casino Journal
Publishing Group, Inc.
Basis of Presentation
The accompanying unaudited consolidated balance sheet gives effect to the
merger which occurred on April 3, 1998 by including the accounts of the
Company and Gaming as of that date. The combined statements of operations
and cash flows include the accounts of the Company only (exclusive of
Gaming). All significant intercompany transactions and balances have been
eliminated.
The financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and
applicable SEC regulations. They do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included. The results of operations for the periods
presented are not necessarily indicative of the results to be expected for
the full year. The accompanying financial statements should be read in
conjunction with the Company's audited financial statements for the year
ended December 31, 1997.
Goodwill
Goodwill represents the cost in excess of fair value of the net assets
acquired in the merger transaction, and will be amortized over 15 years.
Income Per Share (Pro Forma)
Income per share for the three months ended March 31, 1997 has been computed
on a pro forma basis by dividing net income by 3,000,000 shares, which
represents the number of shares of Gaming to be issued to the shareholders of
the Company.
Direct-Response Advertising
The Company has capitalized the cost of a direct-response advertising
campaign for magazine subscriptions. The capitalized costs are amortized
over the period in which revenues from the campaign are earned. At March 31,
1998, $280,000 of direct-response advertising costs was included in prepaid
expenses.
2 - NOTE PAYABLE
The note payable of $200,000 is a demand note and requires monthly payments
of interest only, commencing May 1, 1998, at First Union National Bank's
prime rate plus 1%. Marketable securities owned by a shareholder are
collateral for the note.
3 - RELATED PARTY TRANSACTIONS
The Company rents two office facilities from a shareholder, one of them on a
month-to-month basis. The other space is occupied pursuant to a ten-year
lease which began on June 1, 1997 and requires annual rent payments of
$120,000. Total related party rent expense was $35,403 and $3,524 for the
three months ended March 31, 1998 and 1997, respectively.
3 - RELATED PARTY TRANSACTIONS (Continued)
Loans receivable, shareholders and related parties include loans to the
majority shareholder of $415,337 at March 31, 1998. Also included are a loan
of $35,210 receivable from a member of a shareholder's family and a loan of
$114,108 receivable from a shareholder of one of the subsidiaries.
There was no interest income for the three month periods ended March 31, 1998
and 1997.
<PAGE>7
4 - COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income". SFAS
No. 130 requires that all items that meet the definition of a component of
comprehensive income be reported in a financial statement for the fiscal
period in which they are recognized and the total amount of comprehensive
income be prominently displayed in that same financial statement.
Comprehensive income is defined to include not only net income or loss, but
also the change in equity of a business enterprise during a period from
transactions and other events and circumstances from nonowner sources. There
were no items of other comprehensive income for the three months ended March
31, 1998 and 1997, and the Company's total comprehensive income or loss is
equal to its net income or loss for the periods. Adoption of SFAS No. 130
has no impact on net income or shareholders' equity.
<PAGE>8
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS OF CASINO JOURNAL PUBLISHING GROUP, INC.
AND AFFILIATES
We have audited the accompanying combined balance sheet of CASINO
JOURNAL PUBLISHING GROUP, INC. AND AFFILIATES as of December 31, 1997
and
1996, and the related combined statements of income, changes in shareholders'
equity (deficiency) and cash flows for the years then ended. These combined
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these combined financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the combined financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
combined financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the financial position of CASINO
JOURNAL PUBLISHING GROUP, INC. AND AFFILIATES as of December 31, 1997
and
1996, and the results of their operations and their cash flows for the years
then ended in conformity with generally accepted accounting principles.
Friedman Alpren & Green LLP
New York, New York
June 12, 1998
<PAGE>9
CASINO JOURNAL PUBLISHING GROUP, INC. AND AFFILIATES
COMBINED BALANCE SHEET
DECEMBER 31, 1997 AND 1996
ASSETS
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Current assets
Cash $334,355 $412,546
Accounts receivable 837,176 925,627
Investment in marketable securities 26,567 24,177
Inventories 33,525 22,128
Loans receivable, employees 6,661 25,914
Prepaid expenses and taxes 5,711 15,004
--------- ---------
Total current assets 1,243,995_ 1,425,396_
Property and equipment - at cost, less accumulated
depreciation and amortization 217,491 150,463
Loan receivable, shareholders and related parties 380,322 610,841
Other assets 47,683 27,016
---------- ----------
$1,889,491 $2,213,716
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities
Accounts payable and accrued expenses $1,051,609 $874,698
Note payable - 65,659
Current portion of deferred subscription revenues 565,257 548,295
Current maturities of loan payable - automobile 9,025 14,585
---------- ---------
Total current liabilities 1,625,891 1,503,237
Deferred subscription revenues, less current portion 449,227 499,689
Loan payable - automobile, less current maturities - 9,025
--------- ---------
2,075,118 2,011,951
--------- ---------
Minority interest in American Gaming Summit, LLC 29,818 63,849
--------- ---------
Commitment - -
Shareholders' equity (deficiency)
Common stock 11,100 11,100
Additional paid-in capital 66,177 66,177
Retained earnings (deficit) (292,722) 60,639
--------- --------
(215,445) 137,916
---------- ----------
$1,889,491 $2,213,716
========== ==========
The accompanying notes are an intregal part of these combined financial statements.
<PAGE>10
CASINO JOURNAL PUBLISHING GROUP, INC. AND AFFILIATES
COMBINED STATEMENT OF INCOME
YEARS ENDED DECEMBER 31, 1997 AND 1996
</TABLE>
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Revenues
Advertising $4,237,232 $3,885,898
Subscriptions 1,629,207 1,845,233
Trade shows 914,078 864,531
Other 484,494 393,494
---------- ----------
_7,265,011 _6,989,156_
---------- ----------
Direct costs
Printing 1,514,989 1,573,927
Production 838,425 883,993
Postage 438,238 396,075
Distribution 281,210 269,018
Commissions 638,342 491,917
Other 185,536 259,469
--------- ---------
_ 3,896,740_ 3,874,399_
--------- ---------
Gross profit 3,368,271 3,114,757
General and administrative
expenses 2,968,960 3,018,466
--------- ---------
399,311 96,291
Other income 33,972 31,293
--------- ---------
Income before income taxes and minority interest 433,283 127,584
Income taxes 2,124 6,715
--------- ---------
income before minority interest 431,159 120,869
Minority interest in earnings of
American Gaming Summit, LLC 60,870 80,139
--------- ---------
Net income $370,289 $40,730
========= =========
Pro forma income data (unaudited)
Income before income taxes and minority
interest, as reported $433,283
Minority interest in earnings of American Gaming
Summit, LLC, as reported 60,870
---------
Income before taxes, as adjusted 372,413
Pro forma income taxes 140,000
--------
Pro forma net incom $232,413
========
Basic and diluted income per shar $.08
========
Shares used in the calculation of income per share 3,000,000
=========
</TABLE>
The accompanying notes are an intregal part of these combined financial
statements.
<PAGE>11
CASINO JOURNAL PUBLISHING GROUP, INC. AND AFFILIATES
COMBINED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(DEFICIENCY)
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
Additional Retained
Common Paid-in Earnings
Stock Capital (Deficit)
<S> <C> <C> <C>
Balance, January 1, 1996 $11,100 $66,177 $135,497
Net income - - 40,730
Dividends paid - - (115,588)
------- ------- --------
Balance, December 31, 1996 11,100 66,177 60,639
Net income - - 370,289
Dividends - - (723,650)
------- ------- ---------
Balance, December 31, 1997 $11,100 $66,177 $(292,722)
======= ======= =========
</TABLE>
The accompanying notes are an intregal part of these combined financial
statements.
<PAGE>12
CASINO JOURNAL PUBLISHING GROUP, INC. AND AFFILIATES
COMBINED STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C>
Cash flows from operating activities
Net income $370,289 $40,730
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation and amortization 59,864 50,737
Minority interest in earnings of American
Gaming Summit, LLC 60,870 80,139
Changes in assets and liabilities
Accounts receivable 88,451 (152,731)
Inventories (11,397) (2,599)
Prepaid expenses and taxes 9,392 3,896
Other assets (20,667) (1,526)
Accounts payable and accrued expenses 176,911 437,096
Deferred subscription revenu (33,500) 43,189
-------- --------
Net cash provided by operating activities 700,213 498,931
-------- --------
Cash flows from investing activities
Additions to property and equipment (126,892) (72,238)
Investment in marketable securities (2,390) (3,638)
Loans receivable, employees 19,253 (13,744)
Loans receivable, shareholders and related parties 230,519 (149,092)
-------- --------
Net cash provided by (used in) investing activities 120,490 (238,712)
-------- --------
Cash flows from financing activities
Principal payments on note payable (65,659) (115,269)
Principal payments on loan payable, automobile (14,585) (14,972)
Dividends paid (723,650) (115,588)
Dividends paid to minority interest (95,000) (125,000)
------- -------
Net cash used in financing activities (898,894) (370,829)
------- -------
Net decrease in cash (78,191) (110,610)
Cash, beginning of year 412,546 523,156
Cash, end of year $334,355 $412,546
======== ========
Supplemental cash flow disclosures
Interest paid $25,204 $30,584
Income taxes paid 4,566 6,858
</TABLE>
The accompanying notes are an intregal part of these combined financial
statements.
<PAGE>13
CASINO JOURNAL PUBLISHING GROUP, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
The Company, with offices in Atlantic City, New Jersey, and Las Vegas,
Nevada, publishes consumer gaming magazines and gaming industry trade
publications. The Company also sponsors and operates gaming industry trade
shows.
Basis of Combination
The accompanying financial statements include the accounts of Casino Journal
Publishing Group, Inc. (formerly known as Ace Marketing, Inc.) and its
affiliates, Casino Journal of New Jersey, Inc., Casino Journal of Nevada,
Inc., Casino Communications, Inc., Gaming Entertainment Expositions, Inc.,
and its 60%-owned subsidiary, American Gaming Summit, LLC (collectively, the
"Company"). These entities have been combined based on common control and
the shareholders' plan to sell the stock of these entities in a single
transaction. All significant intercompany transactions and balances have
been eliminated.
Use of Estimates
Management uses estimates and assumptions in preparing financial statements.
Those estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities, and the
reported revenues and expenses.
Investment in Marketable Securities
Marketable securities, consisting of common stock, are classified as
available-for-sale in accordance with the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". SFAS No. 115 requires that such
investments be stated at fair value, with unrealized gains or losses shown as
a separate component of shareholders' equity. Unrealized gains and losses at
December 31, 1997 and 1996 are not material and, accordingly, have not been
reflected in the accompanying financial statements.
Inventories
Inventories, which consist principally of books, are stated at the lower of
cost (first-in, first-out) or market.
Property and Equipment
Property and equipment are carried at cost. Depreciation is computed on the
straight-line and accelerated methods over the estimated useful lives of the
assets. Leasehold improvements are amortized over the term of the lease.
Revenue Recognition
Subscription revenues are deferred and recognized in income as issues of
magazines and newsletters are delivered to the subscribers. Advertising
revenue is recognized on publication of the respective magazine.
Income Taxes
Each entity has elected S Corporation status for Federal and New Jersey
income tax purposes, where applicable. Under these elections, taxable income
or loss is reportable on the shareholders' individual income tax returns, and
the entities are not required to make provisions for Federal income tax.
Provisions are made for New Jersey S Corporation tax. The pro forma income
taxes for the year ended December 31, 1997 include the adjustments necessary
to reflect taxes on a C Corporation basis that would have been incurred by
the Company.
Concurrent with the merger with Gaming Venture Corp., U.S.A., a Nevada
corporation ("Gaming") (see Note 9), the Company became a wholly-owned
subsidiary of Gaming, the S Corporation elections terminated and the Company
will be subject to all Federal and state corporate income taxes.
Income Per Share
Income per share for 1997 has been computed on a pro forma basis by dividing
net income by 3,000,000 shares, which represents the number of shares of
Gaming issued to the shareholders of the Company.
Reclassifications
Certain reclassifications have been made to the prior year financial
statements to conform to the current year presentation.
<PAGE>14
Property and equipment consist of the following:
1997 1996
Equipment $90,204 $82,993
Furniture and fixtures 260,438 174,419
Vehicles 75,123 75,123
Leasehold improvements 33,662 -
------- -------
459,427 332,535
Less - Accumulated depreciation and
amortization 241,936 182,072
------- -------
$217,491 $150,463
======== ========
3 - NOTE PAYABLE
The note, which was payable to a vendor on open account and was converted in
1995 to a note secured by accounts receivable and inventories, was satisfied
in 1997. Monthly payments of $10,000 including interest at 10% were
required. Interest expense on the note was $5,117 and $15,947 for the years
ended December 31, 1997 and 1996, respectively.
4 - LOAN PAYABLE, AUTOMOBILE
The loan, which matures in 1998, requires monthly payments of $1,322,
including interest at 7.5%. Interest expense on the loan was $1,276 and
$1,261 for the years ended December 31, 1997 and 1996, respectively.
5 - COMMON STOCK
Common stock, all of which is no par value, consists of the following:
Shares
-------------------------------------
Issued and
Company Authorized Outstanding Amount
------- ---------- ----------- ------
Casino Journal Publishing Group, Inc. 2,500 100 $100
Casino Journal of New Jersey, Inc. 5,000 100 -
Casino Journal of Nevada, Inc. 5,000 100 -
Casino Communications, Inc. 2,500 1,000 1,000
Gaming Entertainment Expositions, Inc. 25,000 300 10,000
------ ----- ------
40,000 1,600 $11,100
====== ===== =======
6 - RELATED PARTY TRANSACTIONS
The Company rents two office facilities from a shareholder, one of them on a
month-to-month basis. The other space is occupied pursuant to a ten-year
lease which began on June 1, 1997 and requires annual rent payments of
$120,000. Total related party rent expense was $87,968 and $22,105 for the
years ended December 31, 1997 and 1996, respectively. In 1997, leasehold
improvement costs of $33,662 were incurred for one of these spaces.
Loans receivable, shareholders and related parties include loans to the
principal shareholder of $232,549 and $522,764 at December 31, 1997 and
1996, respectively. Also included is a loan to a family member of a
shareholder, with a balance of $35,210 and $25,343 at December 31, 1997 and
1996, respectively, and a loan to a shareholder of one of the affiliates.
The balance of this loan was $112,563 and $62,734 at December 31, 1997 and
1996, respectively.
Interest income, included in other income, was $33,831 and $27,676 for the
years ended December 31, 1997 and 1996, respectively.
7 - ADDITIONAL CASH FLOWS STATEMENT INFORMATION
During 1996, fully depreciated assets with a cost of approximately $32,700
were written off.
<PAGE>15
8 - LEASE COMMITMENT
In addition to the space leased from a related party (see Note 6), the
Company leases premises under a noncancelable operating lease expiring
September 30, 1999. The lease requires additional rent payments based on
increases in real estate taxes and operating expenses over base period
amounts.
Approximate future minimum rent payments are as follows:
Year Ending
December 31,
-----------
1998 $58,000
1999 49,000
-------
$107,000
========
Rent expense, including related party rent (see Note 6), was $170,897 and
$105,042 for the years ended December 31, 1997 and 1996, respectively.
9 - SUBSEQUENT EVENT
On April 3, 1998, the Company and its combined affiliates merged with Gaming,
and became wholly-owned subsidiaries of Gaming, the legal acquiror. As the
Company's and its combined affiliates' shareholders acquired approximately
65% of Gaming's outstanding voting shares, the merger was accounted for as a
reverse acquisition of Gaming by the Company, the accounting acquiror in the
transaction.
The total cost of the acquisition was $3,331,235, consisting of the purchase
price of $3,217,468, measured by the 1,608,734 common shares retained by
Gaming's shareholders at their fair value at the closing date of $2.00 per
share, plus transaction costs of $113,767.
Simultaneous with the acquisition, Gaming changed its name to Casino Journal
Publishing Group, Inc.
<PAGE> 16
(b) Pro forma financial information.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
The following unaudited pro forma consolidated statements of operations are
based on and should be read in conjunction with the annual (audited) and
interim (unaudited) historical statements of operations of the Company
included elsewhere in this Form 8-K as well as those of Gaming Venture Corp.,
U.S.A. ("Gaming") previously reported in its Form 10-KSB for the year ended
October 31, 1997 and in its Form 10-QSB for the quarter ended January 31,
1998, respectively.
The pro forma statements of operations for (i) the year ended December 31,
1997 and (ii) for the three months ended March 31, 1998, respectively,
consolidate the Company's operations for the year ended December 31, 1997 and
the three months ended March 31, 1998 with that of Gaming's for its year
ended October 31, 1997 and its three months ended January 31, 1998. Each pro
forma statement of operations gives effect to the acquisition of Gaming by
the Company as if it occurred on the first day of the respective period.
Certain other adjustments related directly to the merger which are of a
recurring nature are also reflected in each statement. The pro forma
adjustments are based upon available information and certain assumptions that
management believes are reasonable in the circumstances.
Although the pro forma statements are unaudited, the pro forma statement for
the year ended December 31, 1997 is based on audited financial statements
reported elsewhere in this Form 8-K and on Gaming's October 31, 1997 Form 10-
KSB. However, the pro forma income tax expense for the Company shown therein
reflects an unaudited calculation as if the Company had been subject to
regular Federal income taxes for its year ended December 31, 1997.
The pro forma statements of operations should be read in conjunction with the
notes thereto. Such statements do not purport to be indicative of the
results of operations which may be expected to occur in the future.
<PAGE>17
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Casino Journal Gaming
Publishing Venture Pro Forma Pro Forma
Group, Inc. Corp., U.S.A. Adjustments Combined
<S> <C> <C> <C> <C>
Revenues $7,265,011 $657,910 $ - $7,922,921
Direct costs 3,896,740 - - 3,896,740
---------- -------- ------- ----------
Gross profit 3,368,271 657,910 - 4,026,181
---------- -------- ------- ----------
General and administrative 2,968,960 335,323 793,000 (1)
4,186,283
expenses 89,000 (2)
(Gain) loss on sale of marketable
securities 1,649 (4,685) - (3,036)
Interest income (35,621) (44,937) - (80,558)
--------- ------- ------ ----------
2,934,988 285,701 882,000 4,102,689
Income (loss) before income taxes
and minority interest 433,283 372,209 (882,000) (76,508)
--------- -------
Pro forma income taxes 140,000 -
--------- -------
Income taxes - 33,587
140,000 33,587 (171,587)(3) 2,000
-------- ------- -------- --------
Income (loss) before minority
interest 293,283 338,622 (710,413) (78,508)
Minority interest in earnings of
American Gaming summit, LLC 60,870 - - 60,870
-------- -------- ---------- -----------
Net income (loss) $232,413 $338,622 $(710,413) $ (139,378)
======== ======== =========
==========
Basic and diluted income (loss)
per share $.08 $.21 $(.03)
======== ======== ==========
Weighted average number of common
shares outstanding 3,000,000 1,604,903 4,604,903
========= ========= ==========
</TABLE>
<PAGE>18
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
Casino Journal Gaming
Publishing Venture Pro Forma Pro Forma
Group, Inc. Corp., U.S.A. Adjustments Combined
--------------- -------------- ------------ ----------
<S> <C> <C> <C> <C>
Revenues $2,080,334 $192,458 $ - $2,272,792
Cost of sales 1,153,209 - - 1,153,209
---------- ------- --------- ----------
Gross profit 927,125 192,458 - 1,119,583
--------- ------- --------- ----------
General and administrative 1,087,470 121,041 217,000 (1) 1,447,761
expenses 22,250 (2)
Other expenses 23,413 - - 23,413
Interest income - (14,318) - (14,318)
---------- ------- --------- ----------
1,110,883 106,723 239,250 1,456,856
---------- ------- --------- ----------
Income (loss) before income taxes and
minority interest in earnings of
American Gaming Summit, LLC (183,758) 85,735 (239,250)
(337,273)
Income taxes - 16,650 (16,650) (3) -
--------- ------- ------- --------
Income (loss) before minority
interest (183,758) 69,085 (222,600) (337,273)
Minority interest in earnings of
American Gaming summit, LLC (738) - - (738)
--------- ------ -------- --------
Net income (loss) $(184,496) $69,085 $(222,600) $(338,011)
========= ======= ======== =========
Basic and diluted income (loss)
per share $.04 $(.07)
====== =======
Weighted average number of common
shares outstanding 1,612,903 4,612,903
========= =========
</TABLE>
<PAGE>19
CASINO JOURNAL PUBLISHING GROUP, INC. AND GAMING VENTURE
CORP., U.S.A.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
basis of presentation
The unaudited pro forma consolidated statements of operations give
effect to the merger as if the merger were completed as of November 1, 1996
as to operating results.
PRO FORMA ADJUSTMENTS
The following pro forma adjustments have been made:
(1) To reflect the employment contracts of Glenn Fine, Adam Fine, Alan
Woinski, Lisa Robertson and Roger Gros. Such employment contracts provide
for annual compensation ranging from $150,000 to $525,000.
(2) Amortization of goodwill over 15 years.
(3) Pro forma income tax adjustment.
INCOME (LOSS) PER SHARE
income (loss) per share has been computed assuming 4,604,903 and 4,612,903 as
the weighted average number of common shares outstanding for the year ended
December 31, 1997 and the three months ended March 31, 1998, respectively.
It is assumed that Gaming's weighted average number of common shares
outstanding for the year ended October 31, 1997 of 1,604,903 plus the
3,000,000 Gaming shares issued in the merger is the weighted average number
of shares outstanding for the year ended December 31, 1997, and that the
weighted average number of common shares outstanding for the three months
ended January 31, 1998 of 1,612,903 plus the 3,000,000 Gaming shares issued
in the merger is the weighted average number of shares outstanding for the
three months ended March 31, 1998.
See notes to pro forma consolidated statements of operations.
________________________________________________________________________
_____
__________________________________________________________
(c) Exhibits. Exchange of Stock/Purchase Agreement
Item 8. Change in Fiscal Year. None.
<PAGE>20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
Gaming Venture Corp., U.S.A.
(Registrant)
By: Alan Woinski, President
----------------------------
Date: August 7, 1998
EXCHANGE OF STOCK/PURCHASE AGREEMENT
AGREEMENT, dated April 3,1998 by, between and among CASINO JOURNAL
PUBLISHING GROUP (consisting of Casino Journal of Nevada, Inc., Casino
Journal Publishing Group, Inc., Casino Communications, Inc., Gaming
Entertainment Exposition, Inc.) (collectively also known as "Casino");
GAMING VENTURE CORP, U.S.A. (also known as "Gaming" or "the Company",
including at times any affiliated enterprise or entity); GLENN FINE (also
known as "GF"); ADAM FINE (also know as "AF"); ROGER GROS (also known as
"RG"); LISA ROBERTSON (also known as "LR") (The individuals listed
immediately above will be also known collectively as the Exchanging
Shareholders") and ALAN R. WOINSKI (also known as "Woinski").
WITNESSETH :
WHEREAS, the Exchanging Shareholders collectively own 100% of the
issued and outstanding shares of Common Stock of each constituent
corporation of CASINO, each such Exchanging Shareholder owning that number
of shares of such common stock of those corporations set forth opposite
their names on Schedule 1.4 hereto;
WHEREAS, the Exchanging Shareholders desire to exchange all their
shares in such constituent corporations for shares of common stock of
Gaming, and Gaming desires to exchange its shares for all the shares of
common stock of Casino held by the Exchanging Shareholders;
WHEREAS, simultaneously with such exchange, GF, A F, RG, LR and
Woinski will enter into employment contracts with Gaming, assume the
officerships therewith and discharge the concomitant responsibilities
thereof; and
WHEREAS, promptly following such exchange, the composition of Gaming's
Board of Directors will be changed to conform with the understandings
contained in this Agreement.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements set forth herein, and in reliance on the respective
representations and warranties disclosed below, the parties hereto agree as
follows:
1.1. Subject to the terms and conditions of this Agreement, the
Exchanging Shareholders shall assign, transfer and deliver on the Closing
Date any and all shares of common stock of the constituent corporations of
Casino currently held or owned by them, beneficially or of record, in
exchange for an aggregate of 3,000,000 shares of Common Stock of Gaming to
be issued to each of them in the amounts set forth opposite their respective
names on Schedule 1.1 hereof.
1.2. Subject to the terms and conditions of this Agreement, Gaming
shall issue to the Exchanging Shareholders on the Closing Date an aggregate
of 3,000,000 shares of its Common Stock, in the amounts and to each person
listed in Schedule 1.1 hereof in exchange for all their shares of Casino.
1.3. In the event that any options or warrants listed on Schedule 3.5
hereof or elsewhere, except for the new options granted to the Exchanging
Shareholders and Woinski in this Agreement, ("Designated Options") are
exercised on or before February 1, 1999 and on or before February 1, 2000,
Gaming shall accordingly issue one(1) new share of its common stock, as part
of the consideration for the exchange of shares and purchase contemplated
herein at no additional cost, to the Exchanging Shareholders for each new
share of common stock issued to such option or warrant holders exercising
the Designated Options immediately after each such specified date.
1.4. Upon the execution of this Agreement, Gaming shall grant to the
Exchanging Shareholders options, exerciseable for two(2) years from the
Closing date, to purchase 380,000 shares of its common stock at an exercise
price per share equal to the average between the closing bid and asked
prices as reported on NASDAQ BB for the day prior to the date hereof, the
date of grant, in the amounts set forth opposite the names of each such
Exchanging Shareholder contained in Schedule 1.3 hereof, and the Exchanging
Shareholders shall accept such options, in the amounts and upon the terms
and conditions thereof. Such options shall be governed by an the Option
Certificate, the form of which is attached as Exhibit 1.3 hereto and is made
a part of this Agreement.
1.5. On the Closing Date, the Exchanging Shareholders shall deliver to
Gaming the stock certificates representing any and all their shares of
common stock of Casino owned or held by them as indicated on Schedule 1.4
hereof with the necessary stock transfer documents, fully executed.
1.6. On the Closing Date Gaming shall deliver stock certificates
representing at least 3,000,000 shares of its common stock to the
Exchanging Shareholders in the amount set forth opposite each of their names
listed on Schedule 1.1 hereof
1.7. At the Closing, Gaming shall deliver stock options covering
380,000 shares of its common stock and such Option Certificate in the form
of Exhibit 1.3 hereto to the Exchanging Shareholders, fully executed in the
amounts indicated in Schedule 1.3 hereto set forth opposite their names.
1.8. The shares of Gaming's common stock to be issued to the Exchanging
Shareholders hereunder may be increased to a greater number by mutual
consent of Casino and Gaming at or prior to the Closing as a result of any
material adverse event or fact, or an accumulation of non-material adverse
events or facts, arising from Casino's investigation of the books, records
and operations of Gaming, examination of its business plans, strategies and
financial projections and statements or as a result of other negative
developments pertaining to the Company.
1.9. (a) In the event that Casino, after the exchange of stock and
purchase contemplated herein, for the twelve (12) months of fiscal year
ending September 30 1998 generates total revenue of $8,000,000 or more in
accordance with generally accepted accounting principles from activities
other than the newsletters and consulting businesses currently operated by
Gaming, based upon the Company's consolidated financial statements for that
period, audited by its independent certified accountants, the Company shall
issue, as part of the consideration for the exchange of stock and purchase
hereunder, to the Exchanging Shareholders an additional 750,000 shares of
its common stock within thirty(30) days of the completion of the audit of
such financial statements in the same proportion as the other shares of the
Company's common stock are to be issued to each Exchanging Shareholder as
indicated in Schedule 1.1 hereto.
(b) In the event that Casino, after the exchange of stock and purchase
contemplated herein, for the twelve(12) months of fiscal year ending
September
30, 1999 generates total revenue of $9,000,000 or more in accordance with
generally accepted accounting principles from activities other than the
newsletters and consulting businesses currently operated by Gaming, based
upon the Company's consolidated financial statements for that period,
audited by its independent certified accountants, the Company shall issue,
as part of the consideration for the exchange of stock and purchase
hereunder, to the Exchanging Shareholders another 750,000 shares of its
common stock within thirty(30) days of the completion of the audit of such
financial statements in the same proportion as the other shares of the
Company's common stock are to be issued to each Exchanging Shareholder as
indicated in Schedule 1.1 hereto.
For purposes of ascertaining Casino's revenue for fiscal 1998 and 1999
as set forth immediately above, the fees or income related to (i) any new
business or clients involving consulting services or otherwise, directed or
recommended by Casino or its personnel to Gaming or (ii) any additional
services provided by Casino to Gaming's clients, customers or subscribers
shall be included in Casino's revenue.
2. The purchase and exchange of the respective shares of Common Stock
of the corporations referred to herein (the "Closing") shall take place at
the offices of Cascone & Cole, 711 Third Avenue, New York, New York 10017 ,
on or before February ,1998, at 10:00 A.M., New York time, or at such
other time or date, as Casino and Gaming may agree (the "Closing Date").
3.1. Gaming and Woinski, jointly and severally, hereby represent and
warrant to the Exchanging Shareholders and Casino, as of the date hereof and
as of the Closing Date, as follows:
3.2. Gaming is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Nevada, with full corporate
power and authority to own, lease and operate its properties and to carry on
its business in the place and in the manner as currently conducted. Set
forth in Schedule 3.2 hereto is a list of all jurisdictions in which Gaming
is qualified to do business and is in good standing as a foreign
corporation, which are the only jurisdictions in which such qualification is
necessary and the failure to so qualify would have a material adverse effect
on business.
3.3. (a) Other than Gaming Venture's West, Inc.("GVW"), there are no
subsidiaries of Gaming. GVW is duly incorporated, validly existing and in
good standing under the laws of the State of Nevada, with full power and
authorized to own, lease and operate its properties and to carry on its
business as currently conducted. "Bruce Merrion Public Relations and
Advertising" and "Celebrity Speakers and Entertainment" are business names
under which GVW conducts its business and are not separate corporations or
commercial entities. Set forth in 3.3 (a) hereto are the number of shares
of authorized and outstanding capital stock of GVW, the number of such
outstanding shares owned by the Company and the other shareholders of GVW
and their respective holdings and a list of all jurisdictions in which GVW
is qualified to do business and is in good standing as a foreign
corporation.
(b) Gaming or its subsidiary owns interests in or shares of the
following enterprises: Casinovations, Incorporated (CVI") and Players
Network, Inc. ("PNI"). CVI and PNI are duly incorporated, validly existing
and in good standing in the respective states of Washington and Nevada, with
full power and authority to own, lease and operate their property and
businesses.
Set forth in Schedule 3.3 (b) are the number and/ or percentages of shares
of the authorized and outstanding common stock or other interests of CVI and
PNI, owned by the Company or its subsidiary, and a list of all jurisdictions
in which CVI and PNI are qualified to do business as foreign corporations.
3.3. (c) Set forth in Schedule 3.3 (c) hereto is a list of all such
other corporations in which Gaming or its subsidiary owns equity interests
or securities, the type and number of shares or options owned, the exercise
price of such options, the term of such options and the type of related
registration rights. All such equity interests or securities referred to in
this Section 3 have been duly authorized, validly issued or granted, are
fully paid and are non-assessable (except for the payment of any option
exercise prices), are held with good and marketable title, free and clear of
any liens and encumbrances, and have not been issued in violation of any
preemptive right of shareholders.
7.
3.4. Copies of the Certificate of Incorporation and By-Laws, or other
organizing documents and all amendments, of the Company, GVW, CVI and PNI,
as certified by their respective Secretaries or other responsible
representatives thereof, have previously been furnished to Casino or its
representatives, and such copies are true, correct and complete.
3.5. (a) The authorized capital stock of Gaming consists of 50,000,000
shares of Common Stock, par value $.001 per share, of which 1,608,734 shares
are issued and outstanding and an additional 308, 666 shares are issuable
pursuant to the options or other rights, as set forth on Schedule 3.5
hereto.
(b) All of the issued and outstanding Common Stock of the Company is as
of the date hereof, and will be as of the Closing Date, duly authorized,
validly issued, fully paid and nonassessable and has not been issued in
violation of any preemptive right of shareholders. Except as set forth on
Schedule 3.5 hereto with respect to the options, there are no options,
warrants, rights or agreements in effect obligating the Company to issue or
redeem any of its securities.
3.6. The Company and Woinski, have taken, or will have taken prior to
the Closing, all corporate or other action necessary for the execution and
delivery by it, him and any other related person of this Agreement and/or
the other agreements contemplated by Sections 1.6, 6.9 and 11.3 hereof
(The "Additional Agreements") and to be executed by it, him and any other
related person hereunder and for the consummation of the transactions
contemplated hereby and thereby, and this Agreement constitutes, and such
Additional Agreements, when executed and delivered, will constitute, the
respective valid and binding obligations of such persons, enforceable in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium or similar laws affecting the
enforcement of creditors' rights generally and subject to the qualification
that the availability of equitable remedies is at the discretion of the
court before which any proceeding therefor may be bought.
3.7. The execution, delivery and performance of this Agreement and /or
the Additional Agreements by the Company, Woinski and any other related
person do not and shall not (a) contravene the Certificate of Incorporation,
By-Laws or other organizing documents of the Company, (b) with or without
the giving of notice or the passage of time, (i) violate or conflict with,
or result in a breach of, or default or loss of rights under, any agreement,
mortgage, indenture, lease, instrument, permit or license to which the
Company or Woinski is a party or by which the Company or Woinski, or any of
their respective assets or their common stock, is bound, or any judgment,
order, decree, or, any law, rule or regulation, to which the Company or
Woinski or any of their respective assets, or their Common Stock, is
subject, (ii) result in the creation of, or give any party the right to
create, any lien upon any respective asset of the Company or Woinski, (iii)
terminate or give any party the right to terminate, abandon or refuse to
perform, any agreement, arrangement or commitment to which the Company or
Woinski is a party or by which either of them or any of their respective
assets, or their Common Stock are bound or (iv) accelerate or modify the
time within which, or the terms under which, the Company or Woinski is to
perform any duties or obligations or receive any rights or benefits under
any agreement, arrangement or commitment. Any authorization, approval,
order, license, permit, franchise or consent of, declaration to, or filing
or registration with, any court, governmental authority, or third party
which is required in connection with the execution, delivery and performance
of this Agreement and the Additional Agreements by the Company and Woinski is
listed in Schedule 3.7 and has been, or shall be prior to the Closing Date,
obtained or effected.
3.8. Except as otherwise set forth in Schedule 3.8 hereto, none of the
Gaming's shareholders or any of their respective relatives or affiliates
owns, directly or indirectly, any interest in any corporation, partnership,
joint venture or other business entity that (a) competes with the Company,
(b) sells or purchases products or services to or from the Company, (c)
leases real or personal property to or from the Company, (d) otherwise does
business with the Company or (e) has any claims or causes of action against,
or owes any amount to, the Company.
3.9. The Company has previously furnished or shall furnish prior to the
Closing to Casino or its representatives true, complete and correct copies
of all Gaming's minute books. There are no material omissions from such
minute books of the minutes, proceedings or actions of the shareholders or
the Board of Directors, or any committee thereof, of the Company. The books
of account and other records and documents which the Company has made
available for inspection to Casino or its representatives are genuine and
accurately reflect the operations, transactions or events to which they
relate.
3.10. The Company has previously furnished or shall furnish prior to
the Closing to Casino copies of the audited balance sheets of the Company at
each of October 31, 1997 (the "October Balance Sheet"), October 31, 1996 and
October 31, 1995, and the related statements of income and retained earnings
and cash flows for the fiscal years then ended, together with the notes
thereto in each of the above cases, reported upon by Winter Scheifley &
Associates, P.C. of Denver, Colorado, certified public accountants (the
"Financial Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently
applied, are correct and complete in all material respects and reconcilable
to the books and records of the Company and present fairly the financial
position of the Company as of the dates, and the results of position of the
Company as of the dates, and the results of operations and cash flows of the
Company for the periods, indicated.
3.11. (a) Except as set forth in Schedule 3.11, the Company has no
liability or obligation, whether secured or unsecured, accrued, determined,
absolute or contingent, asserted or unasserted or otherwise, including,
without limitation, pension fund and tax liabilities, which is not reflected
or reserved for in the ordinary course of the Company's business since
October 31, 1997, all of which are fully reflected or reserved on the books
and records of the Company and none of which is , and all of which in the
aggregate are not, materially adverse.
(b) The property and equipment reflected in the October Balance Sheet
continues to be owned by the Company, except for those items which have
been sold or otherwise disposed of in the ordinary course of business since
October 31, 1997. Set forth in Schedule 3.11 is a true, correct and
complete list of all machinery, equipment, office equipment, furniture,
fixtures, leasehold improvements and vehicles owned by the Company, as of
the most recent practicable dates, including (separately for each asset
having a cost over $5,000), to the extent known, the date purchased, the
vendor and a description of such asset. All of such assets are adequate for
the operation of the Company's business at current levels, and no violations
of any applicable building, zoning and other laws, ordinances and
regulations are caused by such assets in a manner or to an extent that could
have a material adverse effect on the use by the Company of the real
property or improvements owned or leased by it.
(c) The accounts receivable reflected in the October Balance
Sheet or, in the case of receivables created subsequent to October 31, 1997,
which are reflected on the books of the Company as of the most recent
practicable date, were the result of bona fide transactions in the ordinary
course of business of the Company. All such accounts receivable, net of the
reserves reflected in the October Balance Sheet or, in the case of
receivables created subsequent to October 31, 1997, on the books of the
Company (none of such reserves being material), have been fully collected or
are fully collectible and are subject to no defenses, counterclaims, set-
offs or recoupment.
(d) Set forth in Schedule 3.11 are true and complete lists of all (i)
consulting contracts and proposals of the Company with respect to its
services, which remained unperformed, in whole or part, as of the latest
practicable date and (ii) all subscribers to Gaming's news letters. All
outstanding commitments and proposals are, in all material respect, in
customary quantities, at customary prices and on customary terms based upon
the past marketing polices with respect to such products and services, and
there are no such orders or commitments which are not expected, upon
fulfillment in accordance with their terms, to result in a gross profit to
the Company based upon its recent experience and operations.
(e) Except as set forth in Schedule 3.11 hereto, during the preceding
12 months from the date hereof, Gaming has not granted material discounts or
rebates and has not lowered or reduced its subscription prices, consulting
fees or any other charges generally.
(f) The Company has never declared or paid any dividends in cash,
assets or securities and has made no declaration to pay such dividends, and
is not obligated or committed to do so in any manner.
(g) No amounts are due to stockholders or employees of Gaming as
uncollected regular salary or loans except for the most current weekly or
monthly period.
3.12. (a) Except as set forth in Schedule 3.12 hereof, the Company has
good and marketable title to all its assets, free and clear of all liens,
except for any lien for current taxes not yet due and payable. Gaming
estimates that such current taxes, including all federal, state and local,
shall not exceed $5,000 .
(b) Set forth in Schedule 3.12 hereof is a true, correct and complete
list of all personal property leased by the Company from third parties.
True, correct and complete copies of all such leases, if any, as in effect
on the date hereof, have been previously furnished to Casino or its
representatives.
(c) The Company's offices, located in Las Vegas, Nevada, are leased from
independent third parties listed in Schedule 3.12 pursuant to a written
lease. A copy of this lease, as in effect on the date hereof, has
previously been delivered to Casino or its representatives. The lease is
valid, binding and in full force and effect. The Company is in compliance
in all material respects with all its leases, no condition or event exists
or has occurred which would constitute a default under such leases. The
Company has not given or received any notice of default thereunder. The
Company has the full use and enjoyment of the leasehold premises and access,
parking and common areas as provided in its leases.
(d) Gaming owns no real property, in part or whole.
3.13. (a) The Company has filed all federal, state, county and local
returns and reports which were required to be filed on or prior to the date
hereof in respect of all income, withholding, franchise, payroll, excise,
property, sales, use, value-added or other taxes or levies, imposts, duties,
license and registration fees, charges, assessments or withholdings of any
nature (all together referred to as, "Taxes"), and has paid all Taxes (and
any related penalties, fines and accrued interest) which have become due
pursuant to such returns or reports or pursuant to any assessment which has
become payable, or, to the extent any liability for any such Taxes (and any
related penalties, fines and accrued interest) has not been fully
discharged, the same has been properly reflected as a liability on the
October Balance Sheet or in Schedule 3.13 and adequate reserves therefor
have been established. All such returns and reports filed on or prior to
the date hereof have been properly prepared and are complete and correct,
other than immaterial errors of form, which do not, singly or in the
aggregate, constitute any additional liability. No extension for the filing
of any such return or report is currently in effect. Except as set forth in
Schedule 3.13 no federal income tax return of the Company has been or is
being audited by the Internal Revenue Service or, to the knowledge of Gaming
or Woinski, after due inquiry, is proposed to be audited. The Company has
not given or been requested to give waivers of any statue of limitations
relating to the payment of any Taxes. There are no claims pending or, to
the knowledge of Gaming or Woinsky after due inquiry, threatened, against
the Company or any
subsidiary for past due Taxes.
(b) The Company is not a party to any agreement characterized as a
lease under Internal Revenue Code ("Code") Section 168 (f) (8) (safe harbor
leases) at any time in effect. Neither the Company nor any of its
predecessors has made, or entered into, a consent under Code Section 341(f)
(l) or agreement under Code Section 341 (f) (3) (B) (shareholder relief from
collapsible corporation rules) (or any comparable state income tax
provision) consenting or agreeing to have the provisions of Section 341 (f)
(2) of the Code (or any comparable state income tax provision) apply to any
disposition of any of the Company's assets or property. The Company is not
acting as a nominee or a trustee for any person, corporation, partnership,
trust or estate.
3.14. (a) Set forth in Schedule 3.14 is the name of each employee of
the Company whose current rate of annual compensation is $30,000 or more,
and each officer and director of the Company. Set forth opposite the name
of each such person on Schedule 3.14 is his current annual compensation,
including bonuses and any "perks" which such person receives, such as
company cars, expense accounts, club ownerships, etc. Also set forth in
such Schedule is the approximate total number of employees of the Company as
of October 31, 1997.
(b) Schedule 3.14 also sets forth a true and complete list of (i) each
oral or written contract, commitment or understanding between the Company
and any current employee whose current rate of annual compensation is
$30,000 or more, any such persons, which is not immediately terminable
without cost or other liability to the Company and (ii) each oral or written
consulting agreement, deferred compensation agreement, severance agreement
or sales representative or other agency agreement involving annual payments
by the Company of $25,000 or more or having a term of more than one year, or
any covenant not to compete or confidentiality agreement, to which the
Company is a party.
(c) Except as set forth in Schedule 3.14 as of October 31,1997, the
Company is not liable for any accrued bonus compensation, vacation pay,
severance pay, arrears of wages or salaries, payroll Taxes or FICA other
than as reflected on the October Balance Sheet, and (ii) since October
31,1997, Gaming has not granted any general increase in wages or salary
rates or benefits for its employees.
(d) Gaming is not a party to any collective bargaining agreement or
any other contract with any labor organization. The Company has satisfactory
relations with its employees and is not involved in any labor dispute,
proceeding, work stoppages or disturbance. There have been no strikes, work
stoppages or labor union organizational campaigns at the Company and no such
strikes, work stoppages or organizational campaigns, are after due inquiry,
threatened.
3.15. Other than its nonstatutory stock option plan, Gaming has no
Employee Benefit Plans in effect as such term is hereinafter defined,
including, without limitation, all profit-sharing, pension, retirement,
bonus, stock option, stock purchase, savings, hospitalization, insurance or
similar plan(s) or arrangements, formal or informal, of the Company
currently in effect or to which it contributes for the benefit of any
current or former employee.
For all purposes of this Agreement: "Employee Benefit Plan" means
any (i) nonqualified deferred compensation or retirement plan or arrangement
which is an Employee Pension Benefit Plan, (ii) qualified defined
contribution retirement plan or arrangement which is an Employee Pension
Benefit Plan, (iii) qualified defined benefit retirement plan or arrangement
which is an Employee Pension Benefit Plan (including any Mulitemployer
Plan), or (iv) Employee Welfare Benefit Plan or other fringe benefit plan or
program as those terms are defined in the Employee Retirement Income
Security Act of 1974, as amended.
3.16. Schedule 3.16 sets forth a true, complete and correct list of all
instruments, agreements, indentures, mortgages, guarantees, notes,
commitments, accommodations, letters of credit or other arrangements or
understandings, oral or written, pursuant to which the Company, any Employee
Benefit Plan of the Company or any party whose obligations have been
guaranteed by the Company has borrowed money, incurred or guaranteed
indebtedness or established any line of credit. Copies of all thereof have
been delivered to Casino or its representatives and such copies are true ,
complete and correct as of the date hereof. Except as set forth in Schedule
3.16, there are no loans to or from any shareholder, director, officer or
employee of the Company or any relative of such persons or any entity in
which any of them has any interest.
3.17. Set forth in Schedule 3.17 is a list of each client of the
Company that accounts for 5% or more of its gross revenues. The
relationships of the Company with all its clients are satisfactory, and
there has been no expression of any intention to terminate or materially
modify any of such relationships.
3.18. The Company owns or has valid and enforceable rights with respect
to all patents, copyrights, trademarks and all proprietary inventors,
developments, processes, formulas, computer programs and other proprietary
rights which are necessary to conduct its business as currently conducted or
proposed to be conducted or proposed to be conducted (collectively, the
"Intellectual Property"). Schedule 3.18 sets forth a true, complete and
correct list of each United States and foreign patent, pending patent
application, registered trademark, trade name or service mark, pending
trademark, trade name or service mark application, registered copyright or
pending copyright registration application filed, owned, licensed or used by
the Company, and a list and brief description of each license or agreement
relating to any patent, copyright, know-how, research and development or
technical assistance to which the Company is a party. Except as disclosed in
Schedule 3.18, Gaming has not granted any license, sublicense or interest
in any of the Intellectual Property. No director, officer, shareholder or
employee of the Company or any relative or affiliate thereof has any
interest in any of the Intellectual Property, or used in the Company's
business. Gaming or Woinski know of no reason why any of the trademarks or
copyrights or their applications listed in Schedule 3.18 is not valid and
entitled to the full scope of the claims set forth therein or under
applicable law, and they are aware of no claim contrary to such validity or
entitlement. Except as disclosed in Schedule 3.18, the products and
services of Gaming and the use by the Company of its Intellectual Property
do not infringe, and they are aware of no claim of third parties, and they
are aware of no infringement of any proprietary right of the Company by any
third party. Gaming has received appropriate assignments of Intellectual
Property from its key employees, copies of which have been furnished to
Casino or its representatives.
3.19. Schedule 3.19 sets forth a true, complete and correct list and,
in that case of any of the same that are not in writing, a brief
description, of all agreements, instruments, leases, understanding or
arrangements of the types described below, whether oral or written,
currently in effect or taking effect on or after the date hereof, to which
the Company is a party and which have not otherwise been disclosed in any
other Schedule:
(a) any real property lease and any lease or conditional sales
agreement for equipment or other personal property involving a total
remaining rental or other payments of $5,000 or more;
(b) any unperformed consulting or service contract or order
outstanding as of the date hereof, providing for sales or services by the
Company in excess of $1,000 per contract or purchase order;
(c) any currently effective supply contract or open purchase order
providing for the acquisition of materials, supplies, inventory, equipment
or services by the Company in excess of $2,500 per contract or purchase
order;
(d) any research and development, distribution, dealership, franchise,
advertising, agency, sales representative or similar agreement;
(e) any royalty agreement, license agreement (including, without
limitation, any license agreement (including, without limitation, any
license of computer programs) or other agreement regarding technology or
proprietary property relating to the business of the Company;
(f) any contract or commitment for capital expenditures in excess of
$5,000;
(g) agreements or option or other arrangements for the purchase or sale
of real property or other assets, or relating to the acquisition of any
operating business assets or the capital stock of any other person or a
merger or consolidation with any person;
(h) partnership or joint venture agreements;
(i) contracts under which the Company agrees to indemnify any party for
any purpose or to share tax liability of any party;
(j) shareholder agreements or other agreements containing obligations
or liabilities of any kind to holders of the Company's securities as such
(including, without limitation, an obligation to register any of such
securities under any federal or state securities law);
(k) covenants not to compete;
(l) any other agreements or arrangements pursuant to terms of which
there is either a current or future obligation or right of the Company to
make payments in excess of $5,000;
(m) any retainer arrangement with attorneys, accountants, actuaries,
appraisers, investment bankers or other professional advisors, other than at
will arrangements not embodied in writing and terminable by the Company
without penalty or other liability or obligation of any kind except for
accounts payable accrued in the ordinary course of business through of the
date of termination;
(n) any agreement with any officer, director or shareholder of the
Company or any relative or affiliate of any officer, director or shareholder
involving obligations of more than $2,000 in the aggregate;
(o) any other contract or commitment not made in the ordinary course of
business of the Company; and
(p) any outstanding offer, agreement in principle or active ongoing
negotiation, the acceptance or consummation of which would result in an
agreement required to be disclosed in such Schedule.
Copies of all such written agreements, instruments, leases and other
arrangements and understandings have previously been delivered to Casino or
its representatives and such copies are true, complete and correct as of the
date hereof.
3.20. Except as disclosed in the appropriate schedule hereto, (a) all
of the contracts, commitments, agreements, leases, instruments or
arrangements required to be disclosed in such schedule are valid, binding
and enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
subject to the qualification that the availability of equitable remedies is
at the discretion of the court before which any proceeding therefor may be
bought: (b) neither the Company nor any other person or entity, is in breach
of, or in default under, any such instrument in a manner or to an extent
which could cause the acceleration or termination thereof or result in the
imposition of a fine, penalty or additional payment thereunder; (c) no
event or action has occurred, is pending or is threatened, which after the
giving of notice, passage of time or otherwise, could constitute or result
in such a breach or default under any of such agreements, leases,
instruments or arrangements, which default has not been cured to the
satisfaction of, or duly waived by, the party claiming such default on or
before the date hereof.
3.21. The Company and all of its insurable tangible assets are insured
against loss or damage by theft, fire and all other hazards and risks of a
character usually insured against by persons operating similar businesses
and properties in the localities where such properties are located, including
claims of defamation under valid and enforceable policies issued by
insurance carriers of substantial assets and recognized responsibility in
amounts sufficient to prevent the insured from becoming a co-insurer within
the terms of such policies. All such policies of insurance are in full
force and effect on the date hereof in accordance with their terms, and the
Company has not received notice of termination of any such policies. Set
forth in Schedule 3.21 is a true, correct and complete schedule of all the
insurance carried by the Company during the past five years, showing the
applicable carriers and insurance agents, policy numbers, policy types,
limits and deductibles, periods of coverage and any retroactive premium
adjustments or other loss-sharing arrangements. Except as set forth in
Schedule 3.21 all insurance carried by the Company during such period was of
the "occurrence" and not of the "claims made" type.
3.22. Except as set forth in Schedule 3.22 (a), there is no claim,
dispute, action, suit, proceeding or investigation pending or, threatened
against, or affecting the Company, Woinski or their respective assets, or
Gaming's common stock or challenging the validity or propriety of their
transactions contemplated by this Agreement, at law or in equity or before
any federal, state, local or other governmental authority or any arbitration
tribunal or other forum, (b) there is no outstanding judgment, order, writ,
ruling, injunction, stipulation or decree of any court, arbitrator or
federal, state, local or other governmental authority, against or affecting
the Company, Woinski or its or his assets, common stock, and (c) there has
been no violation of, or default with respect to, any such judgment, order,
writ, ruling, injunction, stipulation or decree. Gaming or Woinski is not
restricted from carrying out its business anywhere in the world by any
agreement or administrative or judicial order, decree or process in any
action or proceeding in which the Company or any of its predecessors is a
party.
3.23 (a). Gaming has all rights, permits, certificates, licenses,
approvals and other authorizations as are reasonably necessary to conduct
its business and to own, lease, use and operate its assets at the places and
in the manner now conducted and operated, other than any of the same the
absence of which would not have a material adverse effect on the Company's
business, financial condition or operations or the use of its properties
(the "Permits"), all of which are listed on Schedule 3.23. Copies of each
of such Permits have been furnished to Casino or its representatives. None
of Permits will expire or terminate as a consequence of the transactions
contemplated by this Agreement.
(b) The Company has not:
(i) made or cause to be made, or agreed to make any contribution,
payment, or gift of funds or property to any governmental official,
employee, or agent where either the contribution, payment, or gift or the
purpose thereof was illegal under the laws of any federal, state, local, or
foreign jurisdiction;
(ii) established or maintained any unrecorded fund or asset for any
purpose, or made any false entries on any books or records for any reason;
or (iii) made or caused to be made, or agreed to make, any contribution, or
reimbursed any political gift or contribution made by any other person, to
any candidate for federal, state, local, or foreign public office.
(c) The Company has assembled and made available to Casino or its
representatives all filings and reports made by Gaming with any federal,
state or local authority, commission or agency and all correspondence to or
from any such authority, commission or agency relevant to the Company's
business, during the past five years. Except as set forth in Schedule 3.23,
the Company has not received any notice or claim from any such authority,
commission or agency pertaining to any violation of law or any failure to
obtain any permit, certificate, license, approval or authorization or to
make or correct a necessary filing therewith which has not been made, and
neither Gaming nor Woinski knows of any basis for such a notice or claim or
of any reason why any current Permit will not be renewed.
(d) the Company conducts its businesses and affairs in compliance with
all applicable federal, state and local laws, ordinances, rules, regulations
and court or administrative orders and decrees not otherwise referred to in
this Agreement, including, without limitation, any that relate to
securities, health and safety in work areas, pricing, labeling, sales and
distribution or products and services, collective bargaining rights of
employees, equal opportunity and fair, non-discriminatory treatment in
employment, wages, hours and workman's compensation, except where any such
failure to comply would not have a material adverse effect on the business,
financial condition or results of operations of Company or the use of its
properties and assets.
3.24 (a). The Company has no liability (and there is no basis related
to past or present operations, properties, assets or facilities of the
Company, or any predecessor thereof, for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or
demand against the Company giving rise to any liability) under any law (or
rule or regulation thereunder) of any applicable federal, state, local or
foreign government (or agency thereof) concerning the disposal, release or
threatened release of hazardous substances, public health and safety, or
pollution or protection of the environment.
(b) The Company has no liability (and the Company has not handled or
disposed of any substance, arranged for the disposal of any substance, or
owned or operate any property or facility with any substance, or owned or
operated any property or facility in any manner that could form the basis
for any present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand (under the common law or pursuant
to any statute) against the Company giving rise to any liability) for damage
to any site, location, or body of water (surface or subsurface) or for
illness or personal injury.
(c) No pollutant, contaminant, or chemical, industrial, hazardous, or
toxic material or waste ever has been buried, stored, spilled, leaked,
discharged, emitted, or released on any real property that the Company owns
or ever has owned or that Gaming leases or ever has leased.
3.25. The Company has previously furnished or shall furnish prior to
the Closing to Casino or its representatives with a true, correct and
complete list of (a) all bank accounts and credit arrangements maintained by
Gaming and affiliates and all persons authorized to sign or act on behalf of
the Company with respect thereto, and all safe deposit boxes and other
similar custodial arrangements and (b) the names of all persons holding
powers of attorney from the Company or otherwise authorized to act on its
behalf with respect to any matters and a summary of terms thereof.
3.26. Any computer software used by the Company in the conduct of its
business has been, or shall be reduced to writing or are otherwise in a form
calculated to be reasonably understandable to employees of Casino after the
Closing Date.
3.27. The financial projections covering fiscal 1998 for the Company's
operations prepared by its management have been previously furnished to
Casino or its representatives and have been based on assumptions that
Gaming's management believes to be reasonable and reflects its current best
estimate as to the matters set forth therein.
3.28. Since October 31, 1997, the Company has conducted its business,
maintained its properties and equipment and kept its books of account,
records and files, substantially in the same manner as previously conducted,
maintained or kept and solely in the ordinary course of business. Since
October 31,1997 there has not been (a) any material adverse change in the
business or business prospects of the Company or the financial or other
condition thereof, (b) any material loss sustained by Gaming on account of
theft, fire, flood, explosion, accident or other calamity, whether or not
insured, which has materially and adversely interfered, or may materially
and adversely interfere, with the operation of its business or (c) any
event, condition or state of facts, including, without limitation, the
enactment, adoption or promulgation of any law , rule or regulation, the
occurrence of which materially and adversely affects, or threatens to so
affect, the results of operations or the business or financial condition of
the Company or its prospects.
3.29. Neither Gaming nor Woinski has relied upon any representation,
warranty or agreement of Casino or the Exchanging Shareholders not set forth
in writing in this Agreement, the Additional Agreements or any schedule,
certificate, document or instrument delivered pursuant to or in connection
with this Agreement or any Additional Agreement.
3.30. No representation or warranty made by Gaming or Woinski in this
Agreement and no statement to be made by or on their behalf in any
certificate to be furnished in connection with the transactions contemplated
hereby contains or shall contain any untrue statement of a material fact or
omits or shall omit to state any material fact necessary in order to make
such representation or warranty or other such statement, in light of the
circumstances under which they were made, not false or misleading.
4. Casino and the Exchanging Shareholders hereby represent and warrant
to Gaming and Woinski as of the date hereof and as of the Closing Date, as
follows:
4.1 Each of Casino's constituent corporations is a corporation duly
incorporated, validly existing and in a good standing under the laws of the
State of either New Jersey or Nevada with full corporate power and authority
to own, lease and operate its business in the places and in the manner as
currently conducted.
4.2 Each constituent corporation of Casino and the Exchanging
Shareholders have taken, or will have taken prior to the Closing, all
corporate and other action respectively necessary to authorize it to execute
and deliver this Agreement, and the Additional Agreements to which it or
they are is parties and to consummate the transactions contemplated hereby
and thereby, and this Agreement constitutes and, when executed and
delivered, and such Additional Agreements shall constitute, the valid and
binding obligations of each constituent corporation of Casino and the
Exchanging Shareholders as applicable, enforceable in accordance with their
respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting the enforcement
of creditors' rights generally and subject to the qualification that
availability of equitable remedies is at discretion of the court before which
any proceeding therefor may be brought.
4.3. The execution, delivery and performance by each constituent
corporation of Casino and the Exchanging Shareholders of this Agreement and
the Additional Agreements to which it and they are parties and the
consummation of the transactions contemplated hereby and thereby, do not and
shall not (a) contravene the respective Certificate of Incorporation or
respective By-Laws of Casino's constituent corporations or (b) with or
without the giving of notice or the passage of time, violate or conflict
with, or result in a breach of, or default or loss of rights under, any
agreement, mortgage, indenture, lease or instrument to which it or they are
parties or by which it or they or any material portion its or their assets
are bound, or any judgment, order, decree, law, rule or regulation to which
it or they or any material portion of their assets are subject. With or
without the giving of notice or the expiration of any notice or cure period,
Casino's constituent corporations are not in default with respect to any
indebtedness for borrowed money outstanding to any bank or other financial
institution.
4.4. Any authorization, approval, order, license, permit, franchise or
consent of, declaration to, or filing or registration with, any court, or
governmental authority or third party, which is required in connection with
the execution, delivery and performance of this Agreement or the Additional
Agreements by each constituent corporation of Casino or the Exchanging
Shareholders has been, or will be obtained as of the Closing Date.
4.5. There is no pending or threatened claim, action, suit,
investigation or proceeding against Casino's constituent corporations or the
Exchanging Shareholders before any court, arbitrator or governmental
authority which, if determined adversely to it or they, would have a
material adverse effect on the ability of any of them to perform their
obligations under this Agreement or any Additional Agreement.
4.6. Set forth opposite each Exchanging Shareholder's name on
Schedule 1.6 is the number of shares of Common Stock owned by such
Exchanging Shareholder of each constituent corporation of Casino as of the
date hereof. Each such Exchanging Shareholder is the sole beneficial and
record owner of such shares so indicated. On the Closing Date, all right,
title and interest in and to all of such shares, beneficial and of record,
shall be owned by such Exchanging Shareholders, and such shares shall, in
each case, be free and clear of all liens, mortgages, pledges, security
interests, charges, encumbrances, restrictions and any other rights or
adverse interests except as provided by this Agreement; each such Exchanging
Shareholder has and shall have full right, power and authority to sell and
deliver the shares of Common Stock required to be sold by such person on the
Closing Date; and upon the assignment and delivery of the certificates for
such shares by or on behalf of each such Exchanging Shareholder to Gaming,
the Company shall acquire full, good and marketable title to such shares,
free and clear of any liens.
4.7. Neither Casino or the Exchanging Shareholders have relied upon any
representation, warranty or agreement of the Company or Woinski not set forth
in writing in this Agreement, the Additional Agreements or any schedule,
certificate, document or instrument, financial statement delivered pursuant
to or in connection with this Agreement or any Additional Agreement.
4.8. The Exchanging Shareholders are acquiring Gaming's Common Stock for
their own account for investment purposes only, and not with a view to, or
for resale in connection with, any offering or distribution thereof . The
certificates representing the common stock of the Company to be held by the
Exchanging Shareholders shall bear the following legend:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or registered or qualified
under the "blue sky" laws of any State. The securities may not be pledged,
hypothecated, assigned, sold or transferred unless registered under such Act
and blue sky laws as may be applicable or unless, in the opinion of counsel
satisfactory to the Company, exemptions from such laws are available."
4.9. No representation or warranty made by Casino or the Exchanging
Shareholders in this Agreement and no statement to be made by any of them in
any certificate to be furnished in connection with the transactions
contemplated hereby contains or shall contain any untrue statement of a
material fact or omits or shall omit to state any material fact necessary in
order to make such representation or warranty or other such statement, in
light of the circumstances under which they were made, not false or
misleading.
5.1. Between the date of this Agreement and the Closing Date, the
Company shall, in all material respects, (a) preserve substantially intact
its business organization, keep available the services of its present
officers and key employees and preserve its present relationships with
persons having significant business relations therewith and (b) conduct its
business only in the ordinary course. Without limiting the generality of the
foregoing, the Company shall not, without the prior written consent of Casino
in each instance, (i) issue or commit to issue any capital stock of the
Company or any securities exercisable or convertible into shares of capital
stock of the Company except as otherwise reflected in this Agreement or (ii)
sell, or grant or commit to grant any options, warrants or other rights to
subscribe for, or purchase, any shares of capital stock of the Company. In
addition, the Company shall not, without the prior written consent of Casino
in each instance: (A) declare, set aside, or pay any dividend or make any
distribution with respect to capital stock, of the Company, (B) directly or
indirectly redeem, purchase or otherwise acquire or commit to acquire any
capital stock or other ownership interest of any person, (C) effect a merger
or consolidation with any person or a split or reclassification of its
capital stock, or a recapitalization, (D) amend its Certificate of
Incorporation, By-Laws (except to increase the number of directors to seven
or as otherwise contemplated herein or other governing instrument), (E)
waive or commit to waive any rights of substantial value, (F) sell,
exchange, or otherwise dispose of, or cause or suffer the sale, exchange, or
other disposition of, or any lien upon, any assets, except in the ordinary
course of business, (G) sell, assign, license or transfer any right, title
or interest in or to any Intellectual Property, computer program or other
intangible, contingent or otherwise, except normal trade or business
obligations (not including indebtedness for borrowed money other than
working capital borrowings of up to $10,000) in the ordinary course of
business, (I) make or grant any general wages or salary increase, or enter
into or amend any employment, consulting (other than in the ordinary course
of business), agency, personal services, compensation or severance agreement
or arrangement with any person, or (J) enter into any transaction, contract
or commitment other than in the ordinary course of business.
5.2. At the Closing and immediately thereafter, Gaming shall use its
best efforts to have cash and /or cash equivalents on hand, less any
outstanding liabilities, of at least $1,000,000, but in no event shall it
have on hand less than $900,000 of such assets, net of any such liabilities,
and it shall nonetheless account for any difference between these amounts to
the full satisfaction of Casino.
5.3. Between the date of this Agreement and the Closing Date, Gaming and
Woinski shall refrain from taking, and shall cause the Company to refrain
from taking, without the prior written consent of Casino in each instance,
any action which would render any of the representations or warranties set
forth in Section 3 hereof materially inaccurate as of the Closing Date. The
Company or Woinski, as applicable, shall notify Casino promptly of the
occurrence of any matter, event or change in circumstances after the date
hereof that would have been required to be disclosed hereunder if it had
occurred prior to the date hereof. Between the date of this Agreement and
the Closing Date, the Company shall supply to Casino or its representatives,
on a monthly basis, copies of all internally generated sales reports and
financial statements, and updated subscription and consulting contract
schedules as contemplated under Section 3 hereof.
5.4. Between the date of this Agreement and the Closing Date, the
Company and Woinski shall cause Gaming to give to Casino and its
representatives full access during normal business hours, upon reasonable
prior notice, to all of the premises, files, books and records of Gaming and
their affiliates and to cause their officers to furnish such financial and
operating data and other information with respect to their respective
businesses as Casino shall from time to time request; provided, however,
that any such investigation shall be conducted in such manner as not to
interfere unreasonably with the operations of such businesses and to
preserve the confidentiality of the transactions contemplated by this
Agreement. Any information obtained in the course of such investigations
shall be kept confidential except for that already in the public domain or
previously known by Casino or its officers. No such investigation shall
affect any of the representations and warranties hereunder. During such
investigation, Casino and its representatives shall have the right to make
copies of, or excerpts from, such files, books and records as they may deem
advisable. If this Agreement is not consummated, Casino shall return to
Company all such copies.
6. The obligations of Casino and the Exchanging Shareholders under
Section 1 of this Agreement are subject to the satisfaction, on or prior to
the Closing Date, of the following conditions:
6.1. The Company and Woinski shall have performed and complied in all
material respects with all agreements and conditions required by this
Agreement to be performed or complied with by them on or prior to the
Closing Date.
6.2. All representations and warranties of Gaming and Woinski set
forth in this Agreement shall be true and correct in all material respects
on and as of the Closing Date, as though made on and as of the Closing Date.
6.3. Casino shall have received a certificate or certificates to the
effect set forth in Section 6.1 and 6.2 executed by Gaming and Woinski with
respect to the due performance of, and compliance with, the obligations and
conditions hereunder to be performed and complied with by the Company and
him.
6.4. Casino shall have received an opinion of Jody Walker Esq., counsel
for the Company and Woinski, dated the Closing Date, reasonably satisfactory
in form and substance to counsel for Casino.
6.5. Casino or its representatives shall have received a letter prior
to the date hereof and as of the Closing Date from Winter, Scheifley &
Associates, P.C, independent public accountants for the Company,
substantially in the form approved by Casino or its counsel.
6.6. No claim, action, suit, investigation or proceeding shall be
pending or threatened against any of the parties hereto which, if adversely
determined, might (a) prevent or hinder consummation of the transactions
contemplated by this Agreement, (b) result in the payment of substantial
damages by the Company or Casino as a result of the transactions
contemplated hereby or (c) materially and adversely affect the business or
assets of the Company or Casino.
6.7. (a) Subject to the review and approval of Casino's counsel, the
Company will have prepared and filed the necessary proxy materials with the
Securities Exchange Commission ("SEC) in accordance with its rules and
regulations and the applicable corporate law of the State of Nevada,
(b) after a final review of such materials, the SEC will have approved,
or raised no objections to them.
(c) Once passed upon by the SEC, the Company will establish a timely
date for its shareholders meeting to approve the transactions contemplated
by this Agreement and forward such proxy materials to all its shareholders
expeditiously.
(d) the transactions contemplated herein will be approved by the vote of
a majority of the Company's shareholders and directors at meetings properly
called, held and conducted.
6.8. There shall have been no material adverse change in the financial
condition, results of operations or business or affairs of the Company since
October 31, 1997 prior to Closing.
6.9. The following agreements shall have been executed and delivered by
all parties thereto (other than Casino, or, in the case of the Employment
Agreements hereinafter referred to, the Exchanging Shareholders):
(A) Employment Agreement between the Company and Alan Woinski
substantially in the form of Exhibit 6.9 attached hereto (the "Employment
Agreement");
(B) to the extent not previously accomplished or delivered, assignment
by employees of the Company to Gaming of all Intellectual Property invented
or developed by them, in form consistent with the applicable law or
otherwise reasonably acceptable to Casino.
(C) Option Certificate referred to in Section 1.6, substantially in the
form of Exhibit A hereto.
(D) Buy-back Agreement referred to in Section 11.3, substantially in
the form of Exhibit 11.3 hereto.
6.10. At the Closing Gaming shall have received resignation of those
directors of the Company not remaining on Board of Directors pursuant to
Section 10.2, and of such officers of the Company as are designated by
Casino consistent with the Employment Agreement and any additional
employment agreements to be entered into by the Company with the consent of
Casino. In addition, the Board of Directors of the Company shall have
increased its size and elected the respective designees of Casino in
accordance with Section 10.2.
6.11. Casino shall have received copies of the resolutions of Gaming's
Board of Directors and Shareholders certified by the Secretary or an
Assistant Secretary of the Company approving the execution and delivery of
this Agreement, the Additional Agreements and the consummation of the
transactions contemplated hereby and thereby.
6.12. All actions, proceedings, instruments, documents and other legal
matters in connection with the transactions contemplated by this Agreement
shall be reasonably satisfactory in all respects to counsel for Casino.
7. The obligations of Gaming and Woinski under Section 1 of this
Agreement are subject to the satisfaction, on or prior to the Closing Date,
of the following conditions:
7.1. Casino and the Exchanging Shareholders shall have performed and
complied in all material respects with all agreements and conditions
required by this Agreement to be performed or complied with by it and them
on or prior to the Closing Date.
7.2. All representations and warranties of Casino and the
Exchanging Shareholders set forth in this Agreement shall be true and
correct in all material respects on and as of the Closing Date, as though
made on and as of the Closing Date.
7.3. The Company shall have received a certificate to the effect
set forth in Section 7.1 and 7.2 executed by any Vice President of Casino
with respect to the representations and warranties of Casino and such
shareholders set forth in this Agreement, their due performance of and
compliance with the obligations and conditions hereunder to be performed and
complied with by them.
7.4. Gaming and the Woinski shall have received an opinion of
Messrs. Cascone & Cole, counsel for date the Closing Date, reasonably
satisfactory in form and substance to counsel for them.
7.5. No claim, action, suit, investigation or proceeding shall be
pending or threatened against Casino or any of the Exchanging Shareholders
which, if adversely determined, might (a) prevent or hinder consummation of
the transactions contemplated by this Agreement, (b) result in the payment
of substantial damages by Casino as a result of the transactions
contemplated hereby or (c) materially and adversely affect the business or
assets of Casino.
7.6. Gaming shall have received copies of the resolutions of Casino's
constituent corporations Boards of Directors certified by the respective
Secretary or an Assistant Secretary thereof approving the execution and
delivery of this Agreement, the Additional Agreements and the consummation
of the transactions contemplated hereby and thereby.
7.7. All action, proceedings, instruments, documents and other legal
matters in connection with the transactions contemplated by this Agreement
shall be reasonably satisfactory in all respects to counsel for Gaming.
8. Each of the parties hereto shall have the right to waive, in whole
or part, any of the conditions to its or his performance set forth in this
Agreement. Upon such wavier, the waiving party may proceed with the
consummation of the transactions contemplated hereby, it being expressly
understood that such waiver shall not constitute a waiver of any right which
such waiving party may have by reason of the breach by the other party of
any representation, warranty or agreement contained herein, or by reason of
any misrepresentation made by such other party herein, except that in the
case of any such breach or misrepresentation which was expressly disclosed
to the waiving party shall have been deemed to waive any right to
indemnification with respect to such breach or misrepresentation in the
event that the waiving party elects to consummate the transactions
contemplated hereby despite such breach or misrepresentation.
9.1. Gaming and Woinski, jointly and severally, shall indemnify, defend
and hold harmless Casino and the Exchanging Shareholders from and against,
and reimburse them any loss, damage, liability (including any liability by
reason of any settlement of a claim, action, suit or proceeding) or expense
(including reasonable attorney's fees and disbursements) (i) arising out or
connected with any breach or inaccuracy of any representation, warranty or
covenant of any of them contained in this Agreement or in any schedule,
certificate, document or instrument delivered pursuant to or in connection
with this Agreement or any claim, action, allegation, suit or proceeding
asserted or instituted arising out of any matter or thing covered by such
representations, warranties or covenants, (ii) any tort, products liability
or general liability, obligations of Gaming or its investment in CVI or PNI
whether pursuant to any guaranty executed by it or otherwise, to the extent
that any such liability, obligation or claims exceeds any net proceeds
realized by the Company from any sale of its interest in CVI or PNI.
9.2. Gaming and Woinski, jointly and severally, shall further
indemnify, defend and hold harmless Casino and the Exchanging Shareholders
from and against, and to reimburse them for, any loss, damage, liability
(including any liability by reason of any settlement of claim, action, suit
or proceeding) or expense (including any related penalties, fines and
accrued interest and reasonable attorneys' fees and disbursements) arising
out of, or in connection with:
(A) Any liability for Taxes of the Company attributable to the period
through and including the Closing Date (the "Pre-Closing Tax Period") or
arising out of any transaction consummated by the Company or any of their
respective successors or affiliates during the Pre-Closing Tax Period except
to the extent reflected on the October Balance Sheet or in Schedule 3.12.
(B) Any liability for taxable periods after the Closing Date that
results from an adjustment under Section 481 of the Code with respect to the
Pre-Closing Tax Period; and
(C) Any claim, action, allegation, suit or proceeding arising out of or
relating to any such Taxes or other liabilities or alleging any such Taxes
or other liabilities to be payable. For purposes of this Section 9.2, in
the case of any taxable period that includes (but does not end on) the
Closing Date:
(1) the periodic Taxes of the Company that are not based on income or
receipts (e.g., property taxes) attributable to the Pre-Closing Tax Period
shall be equal to the amount of such Taxes attributable to the entire
taxable period multiplied by a fraction, the numerator which shall be the
number of days during that period that are in the Pre-Closing Tax Period and
the denominator of which shall be the number of days in that taxable period;
and
(2) the Taxes of the Company (other than Taxes described in clause (1)
above) attributable to the Pre-Closing Tax Period shall be computed as if
such taxable period ended as of the close of business on the Closing Date
and shall be computed on an annualized basis.
9.3. Casino and the Exchanging Shareholders shall give prompt notice of
any claim, action, suit or proceeding which Casino and the Exchanging
Shareholders believes might give rise to indemnification under Section 9.1
or 9.2; provided, however, that failure to give such notice shall not
affect the indemnification hereunder except to the extent the indemnifying
parties shall have been actually prejudiced as a result of such failure.
Gaming and Woinski shall have the right to participate in, and, with the
consent of Casino and Exchanging Shareholders, which consent shall not be
unreasonably withheld, to control the defense against any such claim,
action, suit or proceeding as to which Gaming and Woinski agree in writing
that they do not and will not contest their responsibility for indemnifying
Casino and the Exchanging Shareholders in full, at their expense, and with
counsel of their own choosing reasonably acceptable to Casino; provided,
however, that Gaming and Woinski, shall not have the right to control such
defense in the case of any claim, action, suit or proceeding respecting any
patents, patent rights, copyrights or other proprietary rights or with
respect to which an adverse outcome could have a material adverse effect on
the business and affairs of the Company or Casino, in which case shall have
the right to direct any such defense with counsel of its own choosing. No
settlement or compromise of any such claim, action, suit or proceeding shall
be made without the prior consent of Casino and a majority of the Exchanging
Shareholders in interest, which consent shall not be unreasonably withheld
by any of them.
9.4. Casino and the Exchanging Shareholders shall indemnify, defend and
hold harmless Gaming and Woinski from and against, and reimburse them for,
any loss, damage, liability (including any liability by reason of any
settlement of a claim, action, suit or proceeding) or expense (including
reasonable attorneys' fees and disbursements) arising out or connected with
any breach or inaccuracy of any representation, warranty or covenant of
Casino and the Exchanging Shareholders contained in this Agreement or in any
schedule, certificate, document or instrument delivered pursuant to or in
connection with this Agreement or any claim, action, suit or proceeding
asserted or instituted arising out of any matter or thing covered by such
representations, warranties or covenants; provided, however, that any
indemnification hereunder shall be payable only to the extent that the
aggregate amount of any such losses, damages, liabilities or expenses shall
not apply to the obligations of Gaming or Woinski to pay expenses under this
Agreement. Gaming and Woinski shall give prompt notice of any claim,
action, suit or proceeding which Gaming or Woinski believe might give rise
to indemnification under this Section 9.4; provided, however, that failure
to give such notice shall not affect the indemnification hereunder except to
the extent the indemnifying parties shall have been actually prejudiced as a
result of such failure. Casino and the Exchanging Shareholders shall have
the right to participate in, and to control, the defense against any such
claim, action, suit or proceeding at its expense, and with counsel of its
own choosing reasonably acceptable to Gaming or Woinski . No settlement or
compromise of any such claim, action, suit or proceeding shall be made
without the prior consent of Gaming or Woinski, which consent shall not be
unreasonably withheld by either of them.
10.1. Each of the Exchanging Shareholders and Woinski, for a period of
five years after the Closing Date (the "Term") shall not, anywhere in the
United States of America, or elsewhere in the world (or for such lesser area
or such lesser period as may be determined by a court of competent
jurisdiction to be a reasonable limitation on the competitive activity of
the respective individuals), directly or indirectly:
(a) engage in any activity for or on behalf of any person (including
himself) or entity engaged in a competitive line of business to that carried
on by the Company during the Term, or engage in any manner (except as
expressly permitted pursuant to the applicable Employment Agreement) in the
design, development, production, marketing or servicing of (i) the Company's
products or services, or (ii) any other product or product or service line
offered, sold, produced or under development by the Company during the Term;
(b) solicit or attempt to solicit business of any customers or clients
of the Company for products or services the same or similar to those
offered, sold, produced or under development by the Company during the Term:
(c) otherwise divert or attempt to divert from the Company any business
whatsoever;
(d) solicit or attempt to solicit for any business endeavor any employee
of the Company (other than secretarial or clerical employees);
(e) interfere in any material respect with any business relationship
between the Company and any other person; or
(f) render any services as an officer, director, employee, partner,
consultant or otherwise to, or have any interest as a stockholder, partner,
lender or otherwise in, any person which is engaged in activities which
would violate the provisions of this Section 10. The foregoing shall not
prevent such individual each from purchasing or owning up to two percent
(2%) of the voting securities of any corporation, the securities of which
are publiclytraded. After the Closing and upon the consent of Gaming a new
board of directors, such individuals may own a greater percentage of the
voting securities of such corporations.
Because the Company does not have an adequate remedy at law to
protect its business from any of the foregoing individuals' competition or
to protect its interests in its trade secrets, privileged, proprietary or
confidential information and similar commercial assets, the Company shall be
entitled to injunctive relief, in addition to such other remedies and relief
that would, in the event of a breach of the provisions of this Section 10.1,
be available to it.
10.2 For five years from the Closing:
(a) Casino and its affiliates (or any successor companies thereto)
shall remain separate subsidiaries of the Company.
(b)The Board of Directors of the Company shall consist of at least
seven (7) members. The Exchanging Shareholders shall be entitled to
designate up to four representatives on the Board of Directors of the
Company, it being understood and agreed that Woinski shall designate up to
three (3) representatives to such Board of Directors and that any actions of
such Board of Directors shall require affirmative vote of a majority of the
number of directors constituting the full board for two (2) years from the
date hereof;
(c)The Company shall not declare or pay any cash dividends or make
any distributions of its cash or assets in respect of its capital stock, or
repay any indebtedness to Woinski, except with the consent of a majority of
the Exchanging Shareholders and of its Board of Directors; and
(d)The parties hereto shall use their best efforts to have their
representatives to the Company's Board of Directors appoint the following
individuals to the positions opposite their name:
Glenn Fine - Chairman and Chief Executive Officer
Alan Woinski - President and Vice Chairman
Adam Fine - Executive Vice President and Treasurer
Roger Gros - Vice President
Lisa Robertson - Vice President and Secretary
11.1. After the execution of this Agreement and prior to the Closing,
the Company shall procure a key-man life insurance policy on the life of
Alan Woinski to take effect immediately after the Closing in an amount not
less than $2,000,000 made payable to the Company in the event of Mr.
Woinski's death. Such policy shall be kept in effect for at least five (5)
years from the Closing Date.
11.2. Upon the Closing, Casino shall terminate its status as an S
corporation under the Internal Revenue Code. Upon such termination, the
Company shall make a distribution to the shareholders of Casino to enable
them to pay any and all estimated federal and state income taxes due for
fiscal year 1997 and/or the applicable portion of fiscal 1998 on any
earnings attributable to Casino prior to the Closing, shall deem loans made
to Glenn Fine and Adam fully satisfied after crediting them with amounts
owed to them by Casino or amounts attributable to their profit interest
therein as shareholders thereof and shall distribute to Glenn Fine that
amount of remaining accrued profits of Casino which is not necessary to
cover its immediate working capital needs.
11.3. As part of both Gaming's and Woinski's obligations hereunder,
Woinski and his wife, Kim Santangelo Woinski, shall execute the Buy-back
Agreement at the Closing, the form of which is attached hereto, marked
Exhibit 11.3 and made a part hereof. Such Agreement shall permit the
Company, Casino and/or the Exchanging Shareholders to repurchase Gaming's
shares of common stock held or to be held by either or both of them in the
event of Woinski's death, disability, termination of employment with the
Company under certain circumstances, or, in the case of his wife only, their
separation or divorce upon the terms and conditions contained in such
agreement.
11.4. At the Closing each of the Exchanging Shareholders will execute the
employment contact with the Company so designated for him or her in a form
substantially similar to that for Woinski, respectively. Failure of any
fewer than two Exchanging Shareholders to enter into such contract shall not
result in a breach or violation of this Agreement by Casino or the
Exchanging Shareholders as a whole.
11.5 In order to further assure Woinski's continued employment
with the Company after the Closing and to provide him with additional
incentive to maximize his efforts for and on its behalf, the Company, upon
the execution of this Agreement, shall grant Woinski an option to purchase
350,000 shares of Gaming's common stock at an exercise price equal to the
average of the closing bid and asked prices as reported on NASDAQ BB on the
day prior to such execution. Such option shall not become effective until
after the Closing, shall run for five years from the Closing Date, shall
vest at the rate of 20% of the total shares of Common Stock covered by such
option per year as long as he is employed by Gaming, and shall otherwise be
in similar form to the Options granted hereunder to the Exchanging
Shareholders.
11.6. In the event that the shares of Gaming's common stock trade at
$1.20 per share or less for any fifteen(15) consecutive day period or more,
as reported on NASDAQ BB, prior to the Closing, Casino has the right to
terminate this Agreement on its and the Exchanging Shareholders' behalf
without any liability or obligation by giving written notice thereof to
Gaming as provided herein.
11.7. In the event that the transactions contemplated herein fail to
consummate and no Closing is held, Gaming and Woinski shall keep
confidential any and all information furnished or provided by Casino or the
Exchanging Shareholders relating to Casino's business and shall return any
and all certificates, documents, lists schedules, financial statements or
projections made available to them.
12.1. In the event the Closing does not occur on or before March 15,
1998, except by mutual agreement of Gaming on its and Woinski's behalf and
Casino, on behalf of it and the Exchanging Shareholders, either Gaming or
Casino may thereafter terminate this Agreement by written notice to the
other as provided herein.
12.2. Any public announcement regarding this Agreement and the
transactions contemplated hereby before the Closing shall require the prior
approval of Casino. In the event that Casino believes that any such
announcement is so required, it will so inform Gaming and consult with it as
to the contents thereof.
12.3. All representations, warranties and agreements made by any party
hereto in this Agreement or in any document or certificate delivered
pursuant hereto shall survive the Closing and shall by unaffected by any
investigation made by or on behalf of any party hereto or by any notice of
breach of, or failure to perform under, this Agreement, except to the extent
effectively waived pursuant to Section 12.8. hereof.
12.4. Each of the parties hereto shall bear, and pay, without any
right of reimbursement from any other party, all costs, expenses and fees
incurred by it or him or on its or his behalf incident to the preparation,
execution and delivery of this Agreement and the performance of such party's
obligation hereunder, whether or not the transactions contemplated by this
Agreement are consummated, including, without limitation, the fees and
disbursements of attorneys, accountants and consultants (including
investment banking advisors) employed by such party; provided, however,
Gaming shall bear the full cost of Casino's preliminary and full audit of
its fiscal 1997 financials. All outstanding expenses payable by both
parties to the respective attorneys shall be paid by such respective parties
at the Closing upon presentation of final bills.
12.5. Each party hereto shall bear all fees, costs and expenses of any
respective brokers, investment bankers, finders and financial advisors
retained or utilized by them, or otherwise acting on their behalf, in
connection with the transactions contemplated by this Agreement or any
Additional Agreement, and shall indemnify and hold harmless the other from
and against all such fees, costs and expenses. All such expenses, if any,
are due, and shall be paid, to the extent practicable, at the Closing.
12.6. From time to time after the date of this Agreement, each of the
parties hereto, at the request of the other, and without further
consideration, shall execute and deliver such further documents or
instruments and shall take such other actions as the requesting party may
reasonably request in order to effect complete consummation of the
transactions contemplated by this Agreement.
12.7. It is understood between the parties hereto that the transaction
contemplated by this Agreement shall be treated as a tax-free B
reorganization, that is, a stock-for-stock exchange under the Section 368
(a)(1)(B) of the Internal Revenue Code.
12.8. All notices, consents and other communications given or required
under this Agreement shall be in writing and shall be deemed to have been
duly given when delivered by Federal Express or a similar overnight courier
to, or five business days following deposit in the United States mails and
mailed by prepaid registered or certified mail addressed to, the party for
whom intended, at the address for such party set forth below, or to such
other address as may be furnished by such party by notice in the manner
furnished herein; provided, however, that any notice of change of address
shall be effective only upon receipt.
If to Casino or any Exchanging Shareholder:
c/o Glenn Fine
Casino Journal Publishing Group
Bayport One
Suite 470
8025 Black Horse Pike
West Atlantic City, New Jersey 08232
with a copy to:
Kenneth T. Cascone, Esq. Cascone & Cole
711 Third Avenue
Suite 1505
New York, New York 10017
If to Gaming or Woinski:
c/o Alan R. Woinski
Gaming Ventures Corp. U.S.A.
Suite 312
177 Main Street
Fort Lee, New Jersey 07026
with a copy to:
Jody Walker, Esq.
7841 South Garfield Way
Littleton, Colorado 80122
12.9. This Agreement, together with the Exhibits and Schedules hereto
and the Additional Agreements contemplated hereby, sets forth the entire
understanding of the parties hereto with respect to its subject matter,
merges and supersedes all prior and contemporaneous understandings with
respect to its subject matter and may not be waived or modified, in whole
or in part, except by a writing signed by Gaming on behalf of itself and
Woinski and Casino on behalf of itself and the Exchanging Shareholders. No
waiver of any provision of this Agreement in any instance shall be deemed to
be a waiver of the same of any other provision in any other instance .
Failure of any party to enforce any provision of this Agreement shall not be
construed as a waiver of its rights under such or any other provision.
12.10. This Agreement shall be binding upon, enforceable against and
inure to the benefit of, the parties hereto and their respective heirs,
administrators, executors, personal representatives, successors and assigns,
and nothing herein is intended to confer any right, remedy or benefit upon
any other person. This Agreement and any rights hereunder may not be
assigned by any party hereto.
12.11. This Agreement shall in all respects be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and fully to be performed in such state, without giving
effect to conflicts of law principles.
12.12. This Agreement may be executed in multiple counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
12.13. References herein to Sections, Schedules and Exhibits are to
the sections, schedules and exhibits, respectively, of this Agreement. As
used herein, the singular includes the plural, and the masculine, feminine
and neuter gender each includes the others where the context so indicates.
The Exhibits and Schedules to this Agreement, including the Schedules shall
be deemed to be a part of this Agreement and are incorporated herein by
reference.
12.14. If any provision of this Agreement is held to be invalid or
unenforceable by a court of competent jurisdiction, this Agreement shall be
interpreted and enforceable as if such provision were severed or limited,
but only to the extent necessary to render such provision and this Agreement
enforceable.
12.15. All disputes, controversies or differences which may arise
between Casino, the Exchanging Shareholders, the Company and/or Woinski out
of or in connection with this Agreement, or the breach hereof, which cannot
be resolved after good faith attempts to reach an amicable solution, shall
be finally settled by arbitration pursuant to the applicable rules of the
American Arbitration Association. Such arbitration shall take place in New
York, New York before three arbitrators, one of which shall be appointed by
a majority of the Exchanging Shareholders, one by Woinski, and the third by
the arbitrators so appointed; provided, however, that the parties by mutual
agreement may designate a single arbitrator. The decision of the
arbitrators shall be final and binding upon all parties hereto. Judgment on
the award may be entered in any court having the requisite jurisdiction, and
each party hereto hereby submits himself or itself to the jurisdiction of
any federal or state court sitting in New York, New York, and hereby waives
any and all objections it or he may have with respect to the jurisdiction of
such forum or the inconvenience of such forum or venue, but only for the
purpose of the entry, enforcement of judgment on and/or appeal of the
arbitrators' award. Notwithstanding the foregoing, in the case of a claim
under Section 9 of this Agreement arising out of or based upon a claim
brought by a third party in a forum other than the arbitral panel referred
to above, any issue as to the liability of a party to this Agreement for
indemnification based upon such claim shall be decided by the forum before
which such claim is brought; provided, however, that such forum has or
obtains the requisite jurisdiction over the subject matter and the party or
parties thereto.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the
date first set forth above.
GAMING VENTURES CORP USA THE EXCHANGING SHAREHOLDERS
By:_______________________________ ____________________________
Alan Woinski, President Glenn Fine, Individually
_______________________________ ____________________________
Alan Woinski, Individually Adam Fine, Individually
_____________________________
Roger Gros, Individually
_____________________________
Lisa Robertson, Individually
CASINO JOURNAL PUBLISHING GROUP
Glenn Fine, President and as Attorney-in-fact for all
constituent corporations as first define above
Schedule 1.1
<TABLE>
<CAPTION>
Number of Shares of Common
Names of Exchanging Stock of Gaming Ventures Corp.
Shareholders USA to be Received
<S> <C>
Glenn Fine 2,000,000 shs
Adam Fine 500,000 shs
Roger Gros 250,000 shs
Lisa Robertson 250,000 shs
</TABLE<
Schedule 1.3
</TABLE>
<TABLE>
<CAPTION>
Number of Option Shares of
Common Stock of Gaming
Name of Ventures Corp. USA to be
Optionholder Held and Granted
<S> <C>
Glenn Fine 210,000 opt. shs
Adam Fine 50,000 opt. shs
Roger Gros 20,000 opt. shs
Lisa Robertson 20,000 opt. shs
</TABLE>
SCHEDULE 1.4
<TABLE>
<CAPTION>
Names of Individual Casino Journal of Casino Journal Casino Gaming
Entertainment
Shareholders of Nevada, Inc. Publishing Group, Inc. Communications, Inc.
Exposition, Inc.
<S> <C> <C> <C> <C>
Glenn Fine 2,150 number of 1,000 number of 500 number of 420
number of
shares owned shares owned shares owned shares
owned
Adam Fine no. of shs no. of shs 500 no. of shs --- no. of
shs
Roger Gros no. of shs no. of shs no. of shs 430 no. of
shs
Lisa Robertson no. of shs no. of shs no. of shs 150 no. of
shs
</TABLE>
Schedule 3.2
Jurisdictions in which Gaming Venture Corp. U.S.A.
is qualified to do business:
New Jersey
Nevada
Schedule 3.3(a)
Number of shares of authorized and outstanding capital stock of
Gaming Venture's West, Inc.:
50,000,000
Number of such outstanding shares owned by the Gaming Venture Corp.,
U.S.A.: 100,000 (equals 100% ownership)
Jurisdictions in which Gaming Venture's West, Inc. is qualified to do
business:
Nevada
Schedule 3.3(b)
Number and percentages of shares of the authorized and outstanding common
stock of Casinovations, Inc. and Players Network, owned by Gaming Venture
Corp., U.S.A.
Casinovations, Inc. 200,000 Common Shares (represents less than 5%)
Players Network 200,000 Common Shares (represents less than 5%)
Jurisdictions in which Casinovations, Inc. is qualified to do business:
Nevada
Jurisdictions in which Players Network is qualified to do business:
Nevada
Schedule 3.3(c)
All such other corporations in which Gaming Venture Corp., U.S.A. or its
subsidiary (none) owns equity interests, or securities, the type and
number of shares or options owned, the exercise price of such options, the
term of such options and the type of related registration rights.
Royal Casino Group 15,500 Common Shares
Vodavi Technology 5,000 Common Shares
New Horizon Kids Quest 4,000 Common Shares
Chancellor Corp. 1,000 Common Shares
Casino Resource Corp. 20,000 options exercisable at $1 7/16
American Wagering, Inc. 13,000 options exercisable at $9.50
Royal Casino Group 10,000 options exercisable at 7/8
Players Network 100,000 options exercisable at $1.75
All of the above options have piggyback registration rights.
Schedule 3.5
All options and rights regarding Gaming Venture Corp., U.S.A.
Alan Woinski 10,000 options to purchase Common Shares at $.01.
Expiration date is June, 1998
15,000 options to purchase Common Shares at $1.50
Expiration date is July, 1999
5,000 options to purchase Common Shares at $4.50
Expiration date is January 7, 2000
Kim Woinski 10,000 options to purchase Common Shares at $.01.
Expiration date is June, 1998
15,000 options to purchase Common Shares at $1.50
Expiration date is July, 1999
5,000 options to purchase Common Shares at $4.50
Expiration date is January 7, 2000
Louis Dachis 10,000 options to purchase Common Shares at $.01
Expiration date is June, 1998
15,000 options to purchase Common Shares at $1.50
Expiration date is July, 1999
5,000 options to purchase Common Shares at $4.50
Expiration date is January 7, 2000
Clinton Clark 10,000 options to purchase Common Shares at $1.50
Expiration date is July, 1999
MicroCap World 25,000 options to purchase Common Shares at $2.50
Expiration date is June 3, 2000
25,000 options to purchase Common Shares at $4.50
Expiration date is JUNE 3, 2000
Bruce Merrin 10,000 options to purchase Common Shares at $2.50
Expiration date is June 3, 2000
Pat Cruzen 10,000 options to purchase Common Shares at $4.50
Expiration date is January 7, 2000
Jean Regan 10,000 options to purchase Common Shares at $4.50
Expiration date is January 7, 2000
Olsen, Payne and Co. 63,666 "A" Warrants, exercisable into Common Shares at
$4.00 per Common Share
Expiration date is June 1999
93,666 "B" Warrants, exercisable into Common Shares at
$6.00 per Common Share
Expiration date is June 1999
Louis Dachis 667 "A" Warrants, exercisable into Common Shares at
$4.00 per Common Share
Expiration date is June 1999
667 "B" Warrants, exercisable into Common Shares at
$6.00 per Common Share
Expiration date is June 1999
Schedule 3.7
Authorization, approval, order, license, permit, franchise or consent of,
declaration to, or filing or registration with, any court, governmental
authority, or third party which is required in connection with the execution
and performance of this Agreement and the Additional Agreements by the
Gaming Venture Corp., U.S.A. and Woinski:
Board of Directors approval
Shareholder Approval
Schedule 3.8
None
Schedule 3.11(b)
Machinery, equipment, office equipment, furniture, fixtures, leasehold
improvements and vehicles owned by Gaming Venture Corp., U.S.A.
Computers (5)
printers (3)
fax machines (2)
telephones (2)
office equipment (filing cabinets, desks, chairs)
television sets (3)
VCRs (2)
None of the above have a cost of over $5,000
Schedule 3.11(d)
Consulting Contracts with Gaming Venture Corp.,
U.S.A. Players Network
Casinovations, Inc.
Europa Cruises
New Horizon Kids Quest
American Wagering, Inc.
Casino Resource Corp.
Vodavi Technology
Royal Casino Group
Subscribers to Gaming Venture Corp, U.S.A.
Currently over 500, changing on a daily basis
Schedule 3.11(e)
None
Schedule 3.12(a)
None
Schedule 3.12(b)
Leased personal property leased by Gaming Venture Corp., U.S.A. through
third parties
Pitney Bowes mail machine
Credit card machine
Jaguar
Schedule 3.13
None
Schedule 3.14
Total number of employees of Gaming Venture Corp., U.S.A. as of October 31, 1997
Four
Alan Woinski $93,600 per year in salary as of December 31, 1997
No written contract, no set bonus
Kim Woinski $36,400 per year in salary as of December 31, 1997
No written contract, no set bonus
Betty Garcia part time, on an as needed basis, makes between $100
and $200 per week
Bruce Merrin $30,000 per year in salary paid by Gaming Venture
Corp., U.S.A. as officer
$40,000 per year in salary paid by Gaming Venture's
West, Inc. as President
Received 35% of every dollar over $100,000 in net
income from Gaming Venture's West as bonus
Schedule 3.16
None
Schedule 3.17
Clients that account for 5% or more of gross revenues of Gaming Venture
Corp., U.S.A.
Casinovations, Inc.
Players Network
Schedule 3.18
None
Schedule 3.19
(a) lease for office space in Fort Lee, New Jersey and Las Vegas, Nevada
lease for Jaguar - $599 per month, ends 5/31/1999
(b) - (g) None
(h) Joint Venture Agreement with HVS International and Hotels Magazine
for Daily Lodging Report. Gaming Venture Corp., U.S.A. received 50% of
revenues after expenses while HVS and Hotels each get 25% of revenues after
expenses.
(i) - (p) None
Schedule 3.21
None
Schedule 3.22
None
Schedule 3.23
None
