MEMBERSHIP INTEREST PURCHASE AGREEMENT
BY AND AMONG
PHILIP FIELD, JUNE FIELD AND THE SELLING
INVESTMENT MEMBERS LISTED THEREIN,
EACH BEING A MEMBER OF POKER DIGEST, LLC
AS SELLERS
AND
CASINO JOURNAL PUBLISHING GROUP, INC.
AS PURCHASER
DATED AS OF JULY 1, 2000
TABLE OF CONTENTS
ARTICLE I Purchase and Sale of Shares; Closing and Manner of
Payment 1
1.1 Agreement to Purchase and Sell Shares 1
1.2 Purchase Price 2
1.3 Manner of Payment of Purchase Price 2
1.5 Manner of Delivery of Shares 2
1.6 Time and Place of Closing 2
ARTICLE II Representations and Warranties 2
2.1 General Statement 2
2.2 Representations and Warranties of Purchaser 3
2.3 Joint and Several Representations and Warranties of the
Fields 4
CORPORATE 4
FINANCIAL 5
CONDUCT OF BUSINESS 10
CONTRACTS 12
EMPLOYEES 14
REAL ESTATE 18
OTHER ASSETS 19
GENERAL 20
2.4 Individual Representations and Warranties of Sellers 21
ARTICLE III RESERVED 22
ARTICLE IV Conditions to Closing 22
4.1 Conditions to Sellers' Obligations 22
4.2 Conditions to Purchaser's Obligations 22
ARTICLE V Closing 23
5.1 Form of Documents 23
5.2 Purchaser's Deliveries 23
5.3 Sellers' Deliveries 24
ARTICLE VI Post-Closing Agreements 25
6.1 Post-Closing Agreements 25
6.2 Inspection of Records 25
6.3 Confidentiality 26
6.4 Use of Trademarks 26
6.6 Back-Up 26
6.7 Third Party Claims 26
6.9 Liabilities Undertaking 26
6.10 Further Assurances 26
6.11 Injunctive Relief 26
ARTICLE VII Matters Regarding the Fields 27
7.1 Right of First Refusal 27
7.2 Continuing Role of the Fields 28
ARTICLE VIII Indemnification 28
8.1 General 28
8.2 Certain Definitions 28
8.3 Sellers' Indemnification Obligations 29
8.4 Purchaser's Indemnification Covenants 31
8.5 Cooperation 31
8.6 Subrogation 31
8.7 Third Party Claims other than Taxes 31
8.8 Claims Involving Taxes. 33
8.9 Characterization of Indemnity Payments 33
ARTICLE IX RESERVED 33
ARTICLE X Provisions Governing Shares 33
ARTICLE XI Miscellaneous 34
11.4 Expenses; Transfer Taxes 34
11.3 Notices. 34
11.5 Entire Agreement 35
11.6 Non-Waiver 35
11.7 Counterparts 35
11.8 Severability 35
11.9 Applicable Law 35
11.10 Binding Effect; Benefit 35
11.11 Assignability 35
11.13 Amendments 36
11.14 Headings 36
TABLE OF SCHEDULES
Schedule 1 Disclosure Schedule
TABLE OF EXHIBITS
Exhibit A Selling Investment Members List
Exhibit B Allocation of Shares
Exhibit C Form of Assignment
Exhibit D Form of Legal Opinion of Sellers' Counsel
Exhibit E Engagement Letter
Exhibit F Registration Rights Agreement
MEMBERSHIP INTEREST PURCHASE AGREEMENT
THIS AGREEMENT is made as of July 1, 2000, by and among PHILIP FIELD
and JUNE FIELD, husband and wife (the "Fields"), and those individuals
listed on Exhibit A attached hereto and incorporated herein by this
reference (the "Selling Investment Members"), each being a member of
POKER DIGEST, LLC, a Nevada limited liability company (the "Company")
(the "Selling Investment Members"; the Fields and the Selling
Investment Members are sometimes collectively referred to as "Sellers"
and individually as a "Seller"), and CASINO JOURNAL PUBLISHING GROUP,
INC., a Nevada corporation ("Purchaser"). Each member of the Company
and such member's corresponding limited liability company interest is
listed on the Selling Members List attached hereto as Exhibit A.
R E C I T A L S
A. Sellers collectively own sixty percent (60%) of the
outstanding limited liability company interests ("Membership
Interests") of the Company. The Company owns and publishes "Poker
Digest Magazine", owns and operates "Classic Poker Cruises" and
markets and sells certain related retail goods and services, all such
operations focusing on and catering to the poker player.
B. Purchaser desires to purchase the Membership Interests from
Sellers and Sellers desire to sell such Membership Interests to
Purchaser, on the terms and subject to the conditions herein
contained.
A G R E E M E N T S
Therefore, in consideration of the mutual covenants and promises
contained herein, and for other good and valuable consideration, the
receipt and legal sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE I
Purchase and Sale of Membership Interests; Closing and Manner of
Payment
1.1 Agreement to Purchase and Sell Membership Interests. On the
terms and subject to the conditions contained in this Agreement,
Purchaser shall purchase from Sellers, and Sellers shall sell to
Purchaser, all of the Membership Interests. Except as specifically
provided in Section 1.1 of the Sellers' disclosure schedule attached
hereto as Schedule 1 and incorporated herein by this reference (the
"Disclosure Schedule"), the Membership Interests shall be free and
clear of all options, proxies, voting trusts, voting agreements,
judgments, pledges, charges, escrows, rights of first refusal or first
offer, mortgages, indentures, claims, transfer restrictions, liens,
equities, encumbrances, security interests and other encumbrances of
every kind and nature whatsoever, whether arising by agreement,
operation of law or otherwise (collectively, "Claims").
1.2 Purchase Price; Shares. The aggregate purchase price for the
Membership Interests shall be paid to Sellers in the unregistered
common stock of Purchaser. Purchaser shall issue Three Hundred One
Thousand Five Hundred (301,500) shares of its unregistered common
stock (the "Shares") to Sellers. The Shares shall be allocated among
Sellers as set forth in Exhibit B attached hereto. The Shares shall
be issued and held subject to and in accordance with the provisions of
Article X.
1.3 Manner of Delivery of Shares. The Shares shall be delivered
at the Closing (as herein defined) in certificated form in such manner
as Sellers shall designate by written notice delivered to Purchaser
not later than ten (10) business days prior to the Closing. If
Purchaser receives no such notice, then Purchaser shall issue the
Shares in one certificate for each Seller in accordance with the
allocation set forth in Exhibit B attached hereto.
1.4 Manner of Delivery of Membership Interests. At the Closing,
Sellers shall deliver to Purchaser for the Membership Interests
(together with all rights then or thereafter attaching thereto) an
assignment of such Membership Interests substantially in the form
attached hereto as Exhibit C.
1.5 Time and Place of Closing. The transaction contemplated by
this Agreement shall be consummated (the "Closing") immediately after
execution of this Agreement, or on such other date, or at such other
place, as shall be agreed upon by Sellers and Purchaser. The date on
which the Closing shall occur in accordance with the preceding
sentence is referred to in this Agreement as the "Closing Date". If
the Closing shall occur, it shall be deemed to be effective as of
12:01 a.m., prevailing time at the place of Closing on the Closing
Date.
<PAGE>5
ARTICLE II
Representations and Warranties
2.1 General Statement. The parties make the representations and
warranties to each other which are set forth in this Article II. All
such representations and warranties and all representations and
warranties which are set forth elsewhere in this Agreement and in any
financial statement, schedule, exhibit or document delivered by a
party hereto to another party pursuant to this Agreement or in
connection herewith shall survive the Closing (and none shall merge
into any instrument of conveyance) for a period of twelve (12) months,
regardless of any investigation or lack of investigation by any of the
parties to this Agreement. No specific representation or warranty
shall limit the generality or applicability of a more general
representation or warranty. Representations and warranties of the
parties are initially made as of the date hereof. All representations
and warranties of Sellers are made subject to the exceptions noted in
the Disclosure Schedule. All exceptions noted in the Disclosure
Schedule shall be numbered to correspond to the applicable paragraph
of Section 2.3 to which such exception refers.
2.2 Representations and Warranties of Purchaser. Purchaser
represents and warrants to Sellers as follows:
(a) Purchaser is a corporation duly organized, existing and in
good standing, under the laws of the State of Nevada.
(b) Purchaser has full corporate power and authority to enter
into and perform this Agreement. The execution and delivery by
Purchaser of this Agreement and the performance by Purchaser of its
obligations hereunder have been duly authorized and approved by all
requisite corporate action. This Agreement has been duly executed and
delivered by a duly authorized officer of Purchaser, and constitutes a
valid and legally binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms (except to the extent that
enforcement may be affected by laws relating to bankruptcy,
reorganization, insolvency and creditors' rights and by the
availability of injunctive relief, specific performance and other
equitable remedies).
(c) Neither the execution and delivery of this Agreement by
Purchaser, nor the consummation by Purchaser of the transactions
contemplated hereby, will conflict with or result in a breach of any
of the terms, conditions or provisions of its Articles of
Incorporation or by-laws, or of any statute or administrative
regulation, or of any order, writ, injunction, judgment or decree of
any court or governmental authority or of any arbitration award.
(d) Purchaser is not a party to any unexpired, undischarged or
unsatisfied written or oral contract, agreement, indenture, mortgage,
debenture, note or other instrument under the terms of which
performance by Purchaser according to the terms of this Agreement will
be a default or an event of acceleration, or grounds for termination,
or whereby timely performance by Purchaser according to the terms of
this Agreement may be prohibited, prevented or delayed.
(e) Neither Purchaser, nor any of its Affiliates (as defined
below) has dealt with any person or entity who is or may be entitled
to a broker's commission, finder's fee, investment banker's fee or
similar payment for arranging the transaction contemplated hereby or
introducing the parties to each other. As used herein, an "Affiliate"
is any person or entity which controls a party to this Agreement or
the Company, which that party or the Company controls, or which is
under common control with that party or the Company. For purposes of
the preceding sentence, the term "control" means the power, direct or
indirect, to direct or cause the direction of the management and
policies of a person or entity through voting securities, contract or
otherwise.
(f) Purchaser is acquiring the Membership Interests for its
own account for investment and with no present intention of
distributing or reselling the Membership Interests or any part thereof
in any transaction which would constitute a "distribution" within the
meaning of the Securities Act of 1933, as amended (the "Securities
Act"). Purchaser understands that the Membership Interests have not
been registered under the Securities Act or any state securities laws
and are being transferred to Purchaser, in part, in reliance on the
foregoing representation.
(g) The annual report filed with the Securities and Exchange
Commission ("SEC") on Form 10-K for the year ending December 31, 1999,
and the quarterly report filed with the SEC on Form 10-Q as of March
31, 2000, including all financial information contained therein,
present accurately and completely the financial condition of Purchaser
as of the dates thereof and the results of operations and cash flows
of the Company for the period of said statements in accordance with
GAAP consistently applied. Since the dates of such reports, except as
noted therein, there have been no material adverse changes in the
operation or financial condition of Purchaser.
2.3 Joint and Several Representations and Warranties of the
Fields. The Fields jointly and severally represent and warrant to
Purchaser that, except as set forth in the Disclosure Schedule:
CORPORATE
(a) The Company is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of
Nevada.
(b) The Company has qualified as a foreign corporation, and is
in good standing, under the laws of all jurisdictions which require
such qualification. All jurisdictions in which the Company is
qualified as a foreign corporation are set forth in Section 2.3(b) of
the Disclosure Schedule.
(c) The Company has full corporate power and authority to
carry on its business as such business is now being conducted.
(d) No consent, authorization, order or approval of, or filing
or registration with, any governmental commission, board or other
regulatory body of the United States or any state or political
subdivision thereof is required for or in connection with the
consummation by the Fields of the transaction contemplated hereby.
(e) Neither the execution and delivery of this Agreement by
the Fields, nor the consummation by the Fields of the transactions
contemplated hereby, will conflict with or result in a breach of any
of the terms, conditions or provisions of the Company's Articles of
Organization or Operating Agreement, or of any statute or
administrative regulation, or of any order, writ, injunction, judgment
or decree of any court or governmental authority or of any arbitration
award to which the Company or the Fields are a party or by which the
Company or the Fields are bound.
(f) True and complete copies of the Articles of Organization
and all amendments thereto, the Operating Agreement and all amendments
thereto, all member records, and all minute books and records of the
Company, have been furnished for inspection by Purchaser. Said member
records accurately reflect all transactions relating to the transfer
or encumbrance of any interest in the Company, and the current
ownership of the Company. The minute books and records of the Company
contain true and complete copies of all resolutions adopted by the
members or the managing members of the Company and any other action
formally taken by them respectively as such.
(g) The Company has no subsidiaries, and does not own any
direct or indirect interest in any corporation, joint venture,
partnership, association or other entity. The Company has not (i)
disposed of the capital stock or assets of any ongoing business (or
portion thereof), or (ii) purchased the business and/or assets of
another person, firm or corporation (whether by purchase of stock,
assets, merger or otherwise).
(h) The Company has only one class of limited liability
company interest; there are no limited liability company interests in
the Company of any other class authorized, issued or outstanding. All
of the issued and outstanding Membership Interests have been validly
issued, are fully paid and nonassessable, and are owned of record by
Sellers. To the best knowledge of the Fields, Sellers own the
proportion of the Membership Interests set forth opposite their
respective names in Exhibit A, free and clear of all Claims. There
are no outstanding subscriptions, options, warrants, rights (including
preemptive rights), calls, convertible securities or other agreements
or commitments of any character relating to the issued or unissued
limited liability company interest, capital stock or other securities
of the Company obligating the Company to issue any securities of any
kind.
FINANCIAL
(i) The Company's books, accounts and records are, and have
been, maintained in the Company's usual, regular and ordinary manner,
in accordance with generally accepted accounting principles ("GAAP")
consistently applied, and all transactions to which the Company is or
has been a party are properly reflected therein.
(j) The Company has delivered to Purchaser complete and
accurate copies of the audited or certified balance sheets, statements
of income and retained earnings, statements of cash flows and notes to
financial statements (together with any supplementary information
thereto) of the Company as of and for the years ended December 31,
1998, and December 31, 1999. The financial statements described in
the preceding sentence are hereinafter referred to as the "Financial
Statements". The Company has also delivered to Purchaser complete and
accurate copies of the unaudited balance sheet and statement of income
and retained earnings and unaudited statement of cash flows of the
Company as of and for the five (5) month period ended May 31, 2000.
The financial statements described in the preceding sentence are
referred to herein as the "Interim Financial Statements". The
Financial Statements and the Interim Financial Statements present
accurately and completely the financial position of the Company as of
the dates thereof and the results of operations and cash flows of the
Company for the periods covered by said statements, in accordance with
GAAP consistently applied. The Company has provided to Purchaser
complete and correct copies of all attorneys' responses to audit
inquiry letters and all management letters from the Company's
independent certified public accountants for the last two (2) fiscal
years of the Company.
(k) None of the trade receivables and notes receivable which
are reflected on the Financial Statements or the Interim Financial
Statements or which arose subsequent to the date of the Interim
Financial Statements, is or was subject to any counterclaim or set
off. All of such trade receivables arose out of bona fide, arms-
length transactions for the sale of goods or performance of services.
All such reserves, allowances and discounts, were and are
substantially consistent in extent with reserves, allowances and
discounts previously maintained by the Company in the ordinary course
of its business. Since May 31, 2000, there has not been a material
change in the aggregate amount of the Company's aggregate trade
receivables or a material adverse change in the aging thereof. The
Company has no outstanding sales on consignment, sales on approval,
sales on return or guaranteed sales.
(l) All inventory of the Company which is held for sale or
resale, including raw materials, work in process and finished goods
(collectively, "Inventory"), consists of items of a quantity and
quality historically useable and/or saleable in the normal course of
business, except for items of obsolete and slow-moving material and
materials which are below standard quality, all of which have been
written down to estimated net realizable value on an item by item
basis and which items, prior to being written down, did not (and do
not now) constitute more than 1% of the Company's total Inventory
either in quantity or value. None of such write-downs have had a
material adverse affect on the financial condition or results of
operations of the Company. With the exception of items of below
standard quality which have been written down to their estimated net
realizable value, the Inventory is free from defects in materials
and/or workmanship. The product mix of the Inventory and the raw
materials and work in process necessary to convert to finished goods
is not materially out of balance in relation to the Company's sales
experience during the past two years and is consistent with the
Company's expectations of the demands of its customers. The Inventory
is not excessive in kind or amount, or slow moving, in light of the
business of the Company done or expected to be done. Since May 31,
2000, there has not been a material change in the level of the
Inventory. All Inventory reflected in the Financial Statements and
the Interim Financial Statements is valued at the lower of cost or
market with cost determined using the average cost accounting method.
All Inventory is, and all tools used in the production of Inventory
are, located at the Leased Premises (as herein defined).
(m) The Company has no obligation or liability of any nature
whatsoever (direct or indirect, matured or unmatured, absolute,
accrued, contingent or otherwise), whether or not required by GAAP to
be provided or reserved against on a balance sheet (all the foregoing
herein collectively being referred to as the "Liabilities") except
for:
(i) Liabilities provided for or reserved against in the
Financial Statements or the Interim Financial Statements;
(ii) Liabilities which have been incurred by the Company
subsequent to May 31, 2000, in the ordinary course of the Company's
business and substantially consistent with past practice;
(iii) Liabilities under the executory portion of any
written purchase order, sales order, lease, agreement or commitment of
any kind by which the Company is bound and which was entered into in
the ordinary course of the Company's business and substantially
consistent with past practice; and
(iv) Liabilities under the executory portion of Permits (as
herein defined), Environmental Permits (as herein defined), licenses
and governmental directives and agreements issued to, or entered into
by, the Company in the ordinary course of business.
None of the Liabilities described in subparagraphs (i) through (iv)
of this paragraph (m) relates to or has arisen out of a breach of
contract, breach of warranty, tort or infringement by or against the
Company or any claim or lawsuit involving the Company.
(n) The Company has good and marketable title to its assets,
free and clear of any liens, claims, encumbrances and security
interests, except for the following liens: (i) statutory liens for
Taxes (as herein defined) not yet due, (ii) liens of carriers,
warehousemen, mechanics and materialmen incurred in the ordinary
course of business for sums not yet due; (iii) liens incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of
social security; (iv) except as set forth in the Financial Statements
and the Interim Financial Statements; and (v) except as set forth in
Schedule 2.3(n) of the Disclosure Schedule. No unreleased mortgage,
trust deed, chattel mortgage, security agreement, financing statement
or other instrument encumbering any of the Company's assets has been
recorded, filed, executed or delivered.
(o) The Disclosure Schedule contains a true and correct list
and description (including coverages, deductibles and expiration
dates) of all insurance policies which are owned by the Company or
which name the Company as an insured (or loss payee), including
without limitation those which pertain to the Company's assets,
employees or operations. All such insurance policies are in full
force and effect and the Company has not received notice of
cancellation of any such insurance policies. In the two (2) year
period ending on the date hereof, the Company has not received any
written notice from, or on behalf of, any insurance carrier relating
to or involving an increase in insurance rates (except to the extent
that insurance risks may be increased for all similarly situated
risks) or non-renewal of a policy, or requiring or suggesting material
alteration of any of the Company's assets, purchase of additional
equipment, or material modification of any of the Company's methods of
doing business.
(p) The Disclosure Schedule contains a list showing:
(i) the name of each bank, safe deposit company or other
financial institution in which the Company has an account, lock box or
safe deposit box;
(ii) the names of all persons authorized to draw thereon
or to have access thereto and the names of all persons and entities,
if any, holding powers of attorney from the Company; and
(iii) all instruments or agreements to which the Company is
a party as an endorser, surety or guarantor, other than checks
endorsed for collection or deposit in the ordinary course of business.
(q) The Disclosure Schedule describes each: (i) business
relationship (excluding employee compensation and other ordinary
incidents of employment) existing on the date of this Agreement
between (x) the Company, and (y) any present or former officer,
director, stockholder or Affiliate of the Company, any present or
former known spouse, ancestor or descendant of any of the
aforementioned persons or any trust or other similar entity for the
benefit of any of the foregoing persons (all such persons and trusts
encompassed by this clause (y) being sometimes collectively referred
to herein as the "Related Parties" and individually as a "Related
Party"); (ii) transaction occurring since January 1, 2000, between the
Company and any Related Party; and (iii) amount owing by or to any of
the Related Parties, respectively, to or from the Company as of the
date of this Agreement. No property or interest in any property
(including, without limitation, designs and drawings concerning
machinery) which relates to and is or will be necessary or useful in
the present or currently contemplated future operation of the
Company's business, is presently owned by or leased or licensed by or
to any Related Party. Prior to the Closing Date, all amounts due and
owing to or from the Company by or to any of the Related Parties
(excluding employee compensation and other incidents of employment)
shall be paid in full. Neither the Company nor any Related Party has
an interest, directly or indirectly, in any business, corporate or
otherwise, which is in competition with the Company's business.
(r) (i) As used in this Agreement, the following terms shall
have the following meanings:
(A) the term "Taxes" means all federal, state, local, foreign
and other net income, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, lease, service,
service use, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property, windfall profits, customs,
duties or other taxes, fees, assessments or charges of any kind
whatever, together with any interest and any penalties, additions to
tax or additional amounts with respect thereto, and the term "Tax"
means any one of the foregoing Taxes;
(B) the term "Returns" means all returns, declarations,
reports, statements and other documents required to be filed in
respect of Taxes, and the term "Return" means any one of the foregoing
Returns; and
(C) the term "Code" means the Internal Revenue Code of
1986, as amended. All citations to the Code, or to the Treasury
Regulations promulgated thereunder, shall include any amendments or
any substitute or successor provisions thereto.
(ii) All Returns required to be filed by the Company have
been properly completed and filed on a timely basis and in correct
form. As of the time of filing, the foregoing Returns correctly
reflected the facts regarding the income, business, assets,
operations, activities, status or other matters of the Company or any
other information required to be shown thereon. No extension of time
within which to file any Return which has not been filed has been
requested or granted.
(iii) With respect to all amounts in respect of Taxes
imposed upon the Company, or for which the Company is or could be
liable, whether to taxing authorities (as, for example, under law) or
to other persons or entities (as, for example, under tax allocation
agreements), with respect to all taxable periods or portions of
periods ending on or before the Closing Date, all applicable tax laws
and agreements have been fully complied with, and all amounts required
to be paid by the Company, to taxing authorities or others, on or
before the date hereof have been paid or have been provided for in a
reserve which is adequate for the payment of such taxes.
(iv) No issues have been raised (and are currently
pending) by any taxing authority in connection with any of the
Returns. No waivers of statutes of limitation with respect to the
Returns have been given by or requested from the Company. The
Disclosure Schedule sets forth (i) the taxable years of the Company as
to which the respective statutes of limitations with respect to Taxes
have not expired, and (ii) with respect to such taxable years sets
forth those years for which examinations have been completed, those
years for which examinations are presently being conducted, those
years for which examinations have not been initiated, and those years
for which required Returns have not yet been filed. All deficiencies
asserted or assessments made as a result of any examinations have been
fully paid, or are fully reflected as a liability in the Financial
Statements and the Interim Financial Statements, or are being
contested and an adequate reserve therefor has been established and is
fully reflected as a liability in the Financial Statements and the
Interim Financial Statements.
(v) The Company is not a party to or bound by (nor will
the Company become a party to or bound by) any tax indemnity, tax
sharing or tax allocation agreement.
(vi) All material elections with respect to Taxes
affecting the Company as of the date hereof are set forth in the
Disclosure Schedule.
(vii) The unpaid Taxes of the Company do not exceed the
reserve for tax liability (excluding any reserve for deferred Taxes
established to reflect timing differences between book and tax income)
set forth or included in the Interim Financial Statements, as adjusted
for the passage of time through the Closing Date, in accordance with
the past practices of the Company.
CONDUCT OF BUSINESS
(s) Except for those occurrences which would not have a
material adverse effect on the financial condition, results of
operations or business prospects of the Company described in Section
2.3(s) of the Disclosure Schedule, the Company has not, since December
31, 1999:
(i) sold, assigned, leased, exchanged, transferred or
otherwise disposed of any of its assets or property, except for sales
of Inventory and cash applied in the payment of the Company's
liabilities, in the usual and ordinary course of business in
accordance with the Company's past practices;
(ii) suffered any casualty, damage, destruction or loss,
or interruption in use, of any asset or property (whether or not
covered by insurance), on account of fire, flood, riot, strike or
other hazard or Act of God;
(iii) written off any material asset as unusable or
obsolete or for any other reason;
(iv) made or suffered any material change in the conduct
or nature of any aspect of the business of the Company, whether or not
made in the ordinary course of business or whether or not such change
had a material adverse effect upon the Company (the foregoing
representation and warranty shall not be deemed to be breached by
virtue of the entry by the Fields into this Agreement, or their
consummation of the transaction contemplated hereby);
(v) waived any right arising out of the conduct of, or
with respect to, the business of the Company;
(vi) made (or committed to make) capital expenditures in
an amount which exceeds $10,000 for any item or $25,000 in the
aggregate;
(vii) discharged any liability except in the usual and
ordinary course of business in accordance with past practices, or
prepaid any liability;
(viii) made any change in accounting methods or
principles;
(ix) borrowed any money or issued any bonds, debentures,
notes or other corporate securities, including without limitation,
those evidencing borrowed money;
(x) entered into any transaction with, or made any payment
to, or incurred any liability to, any Related Party;
(xi) issued or sold any securities of any class;
(xii) paid, declared or set aside any dividend or other
distribution on its securities of any class or purchased, exchanged or
redeemed any of its securities of any class;
(xiii) without limitation by the enumeration of any of the
foregoing, entered into any transaction other than in the usual and
ordinary course of business (by operation of law or otherwise),
substantially consistent with past practices (the foregoing
representation and warranty shall not be deemed to be breached by
virtue of the entry by Sellers into this Agreement or their
consummation of the transaction contemplated hereby).
(t) The Company has not suffered or been threatened with (and
neither the Company nor any of the Fields has knowledge of any facts
which may cause or result in) any material adverse change in the
business, operations, assets, liabilities, financial condition or
prospects of the Company, including, without limiting the generality
of the foregoing, the existence or threat of a labor dispute, or any
material adverse change in, or loss of, any relationship between the
Company and any of its key employees.
(u) Neither the Company nor the Fields have any knowledge of
any intention or indication of intention by a "Significant Customer"
(as herein defined) to terminate its business relationship with the
Company or to limit or alter its business relationship with the
Company in any material respect. Neither the Company nor the Fields
have any knowledge of any intention or indication of intention by a
"Significant Supplier" (as herein defined) to terminate its business
relationship with the Company or to limit or alter its business
relationship with the Company in any material respect. As used
herein, (x) "Significant Customer" means any of the ten (10) largest
customers of the Company, measured in terms of sales volume in dollars
for the year ended December 31, 1999, and (y) "Significant Supplier"
means any supplier of the Company from whom Seller has purchased
$25,000 or more of goods during either of years ended December 31,
1998 or 1999 for use in the Company's business.
CONTRACTS
(v) Except as set forth in Section 2.3(v) of the Disclosure
Schedule, the Company is not a party to, or bound by, or the issuer or
beneficiary of, any undischarged written or oral:
(i) agreement for the employment for any period of time
whatsoever, or in regard to the employment, or restricting the
employment, of any employee of the Company;
(ii) agreement for the payment of severance benefits by
the Company to any of the Company's employees;
(iii) consulting agreement;
(iv) collective bargaining agreement;
(v) plan or contract or arrangement providing for bonuses,
options, deferred compensation, retirement payments, profit sharing,
medical and dental benefits or the like covering employees of the
Company;
(vi) agreement or order for the purchase of Inventory or other
materials having a price under any such agreement or order in excess
of $10,000 or agreement or order for the purchase of Equipment (as
herein defined) having a price under any such agreement or order in
excess of $10,000;
(vii) agreement for the sale of any Equipment, Inventory or
other assets, except for sales of Inventory in the ordinary course of
business;
(viii) lease or sublease, either as lessee or sublessee,
lessor or sublessor, of real or personal property or intangibles,
where the lease or sublease provides for an annual rent in excess of
$25,000 or has an unexpired term as of the Closing Date in excess of
thirty (30) days;
(ix) agreement restricting in any manner the Company's right
to compete with any other person or entity, the Company's right to
sell to or purchase from any other person or entity, the right of any
other party to compete with the Company, or the ability of such person
or entity to employ any of the Company's employees;
(x) agreement between the Company and any of its Affiliates
or other Related Parties;
(xi) agreement for the advertisement, display, or promotion of
any of the Company's products or services which cannot be cancelled by
the Company without payment or penalty upon notice of thirty (30) days
or less;
(xii) guaranty, performance, bid or completion bond, or surety
or indemnification agreement;
(xvii) requirements contract;
(xiii) loan or credit agreement, pledge agreement, note,
security agreement, mortgage, debenture, indenture, factoring
agreement or letter of credit;
(xiv) governmental order or directive;
(xv) agreement for the treatment or disposal of Hazardous
Materials (as herein defined);
(xvi) partnership or joint venture agreement;
(xvii) agreement or arrangement not specifically enumerated
above concerning or which provides for the receipt or expenditure of
more than $10,000, except agreements for the sale of goods or
rendering of services entered into by the Company in the ordinary
course of business.
All agreements, leases, subleases and other instruments referred to in
Section 2.3(v) of the Disclosure Schedule, and all other agreements or
instruments to which the Company is a party or by which it is bound,
are in full force and binding upon the parties thereto. Neither the
Company nor any of the other parties thereto are in default under any
such agreement, lease, sublease or other instrument. No event,
occurrence or condition exists which, with the lapse of time, the
giving of notice, or both, or the happening of any further event or
condition, would become a default under any such agreement, lease,
sublease or other instrument by the Company or the other contracting
party. The Company has not released or waived any of its rights under
any such agreement, lease, sublease or other instrument.
(w) Neither the Company nor any of Sellers is a party to, or
bound by, any unexpired, undischarged or unsatisfied written or oral
contract, agreement, indenture, mortgage, debenture, note or other
instrument under the terms of which performance by Sellers according
to the terms of this Agreement will be a default or an event of
acceleration, or grounds for termination, or whereby timely
performance by Sellers of this Agreement may be prohibited, prevented
or delayed.
(x) The Disclosure Schedule contains a true and correct copy
of every license, permit, registration and governmental approval,
agreement and consent applied for, pending by, issued or given to the
Company, and every agreement with governmental authorities (Federal,
state, local or foreign) entered into by the Company, which is in
effect or has been applied for or is pending, exclusive of
Environmental Permits (as herein defined) (the "Permits"). Such
Permits constitute all licenses, permits, registrations, approvals and
agreements and consents (other than Environmental Permits) which are
required in order for the Company to conduct its business as presently
conducted.
(y) The Company is not subject to any legal obligations to
renegotiate, nor does the Company have knowledge of a claim for a
legal right to renegotiate, any contract, loan, agreement, lease,
sublease or instrument to which it is now or has been a party.
(z) The Company does not have any unsatisfied community or
charitable pledges, contributions or commitments.
(aa) The Company is not subject to any liability, or claim
therefor, for or with respect to price adjustment under any contract
with the U.S. Government or any agency thereof, including any
liability for defective pricing.
EMPLOYEES
(bb) The Company has no ownership interest in, and does not
contribute to, any credit union which has been established by the
Company for any of its employees.
(cc) (i) Neither the Company nor any affiliate of the
Company as determined under Code section 414(b), (c), (m) or (o)
("ERISA Affiliate") maintains, administers or contributes to, nor do
the employees of the Company or any ERISA Affiliate receive or expect
to receive as a condition of employment, benefits pursuant to: any
employee pension benefit plan (as defined in Section 3(2) of the
Employment Retirement Income Security Act of 1974, as amended
("ERISA")) ("Plan"), including, without limitation, any multiemployer
plan as defined in Section 3(37) of ERISA ("Multiemployer Plan"); any
employee welfare benefit plan (as defined in Section 3(1) of ERISA)
("Welfare Plan"); or any bonus, deferred compensation, stock purchase,
stock option, stock appreciation, severance, salary continuation,
vacation, sick leave, fringe benefit, incentive, insurance, welfare or
similar plan or arrangement ("Employee Benefit Plan") other than those
Plans, Welfare Plans and Employer Benefit Plans described in the
Disclosure Schedule.
(ii) All Plans, Welfare Plans and Employee Benefit Plans and
any related trust agreements or annuity contracts (or any related
trust instruments) comply with and are and have been operated in
accordance with each applicable provision of ERISA, the Code
(including, without limitation, the requirements of Code
section 401(a) to the extent any Plan is intended to conform to that
section), other Federal statutes, state law (including, without
limitation, state insurance law) and the regulations and rules
promulgated pursuant thereto or in connection therewith.
(iii) True and complete copies of each Plan, Welfare Plan and
Employee Benefit Plan, related trust agreements, annuity contracts,
determination letters, summary plan descriptions, all communications
to employees regarding any Plan, Welfare Plan, or Employee Benefit
Plan, annual reports on Form 5500, Form 990 and actuarial reports for
the most recent two Plan years, and each plan, agreement, instrument
and commitment referred to herein, have been furnished to Purchaser
and are listed in the Disclosure Schedule; all of the foregoing are
legally valid, binding, in full force and effect, and there are no
defaults thereunder; and none of the rights of the Company thereunder
will be impaired by this Agreement or the consummation of the
transaction contemplated hereby. The annual reports on Form 5500 and
Form 990 and actuarial statements furnished to Purchaser fully and
accurately set forth the financial and actuarial condition of each
Plan and each trust funding any Welfare Plan. With respect to each
Plan, Welfare Plan and Employee Benefit Plan, the Disclosure Schedule
sets forth the name and address of the administrator and trustees and
the policy number and insurer under all insurance policies.
(iv) There are no pending or threatened claims by or on behalf
of any of the Plans, Welfare Plans, or Employee Benefit Plans by any
employee or beneficiary covered under any Plans, Welfare Plans or
Employee Benefit Plans or otherwise involving any Plan, Welfare Plan
or Employee Benefit Plan (other than routine claims for benefits).
(dd) With respect to employees of the Company:
(i) the Company is and has been in compliance with all
applicable laws respecting employment and employment practices, terms
and conditions of employment and wages and hours, including, without
limitation, any such laws respecting employment discrimination,
occupational safety and health, and unfair labor practices;
(ii) the Company is not delinquent in payments to any of
its employees for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed by them to the Closing
Date or amounts required to be reimbursed to such employees;
(iii) upon termination of the employment of any of the
employees of the Company after the Closing Date, the Company will not
be liable to any of its employees for severance pay;
(iv) the employment of each of the Company's employees is
terminable at will without cost to the Company except for payments
required under the Plans, Welfare Plans and Employee Benefit Plans and
payment of accrued salaries or wages and vacation pay. No employee or
former employee has any right to be rehired by the Company prior to
the Company's hiring a person not previously employed by the Company;
(v) the Disclosure Schedule contains a true and complete
list of all employees who are employed by the Company as of May 31,
2000, and said list correctly reflects their salaries, wages, other
compensation (other than benefits under the Plans, Welfare Plans and
Employee Benefit Plans), dates of employment and positions. The
Company does not owe any past or present employees any sum in excess
of $2,500 individually and $7,500 in the aggregate other than for
accrued wages or salaries for the current payroll period, and amounts
payable under Plans, Welfare Plans or Employee Benefit Plans. No
employee owes any sum to the Company.
(ee) Neither the Company nor the Fields have any knowledge of
any intention of or indication by a "Significant Employee" (as herein
defined) that such Significant Employee has terminated or intends to
terminate his employment with the Company. As used herein,
"Significant Employee" means the Chief Executive Officer, the Chief
Operating Officer, the President, any Vice President, the Treasurer or
any other executive officer of the Company.
LITIGATION AND CLAIMS
(ff) There is no litigation or proceeding, in law or in
equity, and there are no proceedings or governmental investigations
before any commission or other administrative authority, pending or,
to the best of the Company's and the Fields' knowledge, threatened
against the Company, or any of the Company's officers, directors or
Affiliates, with respect to or affecting the Company's operations,
business, products, sales practices or financial condition, or related
to the consummation of the transaction contemplated hereby.
(gg) There are no facts which, if known by a potential
claimant or governmental authority, would give rise to a claim or
proceeding which, if asserted or conducted with results unfavorable to
the Company, would have a material adverse effect on the business,
operations, assets, liabilities, financial condition or prospects of
the Company before or after the Closing.
(hh) The Company has not made any oral or written warranties
with respect to the quality or absence of defects of its products or
services which it has sold or performed which are in force as of the
date hereof except as are described in the Disclosure Schedule. There
are no material claims pending, anticipated or threatened against the
Company with respect to the quality of or absence of defects in such
products or services. The Company has not paid or been required to
pay direct, incidental, or consequential damages to any person in
connection with any of such products or services.
(ii) The Company is not a party to, or bound by, any
decree, order or arbitration award (or agreement entered into in any
administrative, judicial or arbitration proceeding with any
governmental authority) with respect to or affecting the properties,
assets, personnel or business activities of the Company.
(jj) The Company is not in violation of, or delinquent in
respect to, any decree, order or arbitration award or law, statute, or
regulation of or agreement with, or any Permit from, any Federal,
state or local governmental authority to which the property, assets,
personnel or business activities to which the Company is subject,
including, without limitation, Federal, state or local laws, statutes
and regulations relating to equal employment opportunities, fair
employment practices, occupational health and safety, wages and hours,
and discrimination.
ENVIRONMENTAL MATTERS
(kk) Both the Company and its assets and business are in
compliance with all Environmental Laws (as herein defined) and
Environmental Permits (as herein defined). A copy of any notice,
citation, inquiry or complaint which the Company has received in the
past two years of any alleged violation of any Environmental Law or
Environmental Permit is contained in the Disclosure Schedule, and all
violations alleged in said notices have been corrected. The Company
possesses all Environmental Permits which are required for the
operation of its business, and is in compliance with the provisions of
all such Environmental Permits.
(ll) There has been no storage, treatment, generation,
transportation or Release (as herein defined) of any Hazardous
Materials (as herein defined) by the Company or its predecessors in
interest, or by any other person or entity for which the Company is or
may be held responsible, at any location in violation of, or which
could give rise to any obligation under, Environmental Laws.
(mm) RESERVED
(nn) For the purposes of this Agreement:
(i) "Environmental Laws" means all federal, state and
local statutes, regulations, ordinances, rules, regulations and
policies, all court orders and decrees and arbitration awards, and the
common law, which pertain to environmental matters or contamination of
any type whatsoever. Environmental Laws include, without limitation,
those relating to: manufacture, processing, use, distribution,
treatment, storage, disposal, generation or transportation of
Hazardous Materials; air, surface or ground water or noise pollution;
Releases; protection of wildlife, endangered species, wetlands or
natural resources; health and safety of employees and other persons;
and notification requirements relating to the foregoing;
(ii) "Environmental Permits" means licenses, permits,
registrations, governmental approvals, agreements and consents which
are required under or are issued pursuant to Environmental Laws;
(iii) "Hazardous Materials" means:
(A) pollutants, contaminants, pesticides, radioactive
substances, solid wastes or hazardous or extremely hazardous, special,
dangerous or toxic wastes, substances, chemicals or materials within
the meaning of any Environmental Law, including without limitation any
(i) "hazardous substance" as defined in the Comprehensive
Environmental Response, Compensation and Liability Act, 42 V.S.C.
9601, et. seq., as amended and reauthorized ("CERCLA"), and (ii) any
"hazardous waste" as defined in the Resource Conservation and Recovery
Act ("RCRA"), 42 U.S.C., Sec. 6902 et. seq., and all amendments
thereto and reauthorizations thereof; and
(B) even if not prohibited, limited or regulated by
Environmental Laws, all pollutants, contaminants, hazardous, dangerous
or toxic chemical materials, wastes or any other substances, including
without limitation, any industrial process or pollution control waste
(whether or not hazardous within the meaning of RCRA) which could pose
a hazard to the environment or the health and safety of any person, or
impair the use or value of any portion of the Leased Premises;
(iv) "Release" means any spill, discharge, leak, emission,
escape, injection, dumping, or other release or threatened release of
any Hazardous Materials into the environment, whether or not
notification or reporting to any governmental agency was or is,
required, including without limitation any Release which is subject to
CERCLA.
REAL ESTATE
(oo) The Company does not own any real estate.
(pp) The Company does not lease any real estate other than the
premises identified in the Disclosure Schedule as being so leased (the
"Leased Premises"). The Leased Premises are leased to the Company
pursuant to written leases, true, correct and complete copies of which
are attached to the Disclosure Schedule. None of the improvements
comprising the Leased Premises, or the businesses conducted by the
Company thereon, are in violation of any building line or use or
occupancy restriction, limitation, condition or covenant of record or
any zoning or building law, code or ordinance or public utility or
other easements. No material expenditures are required to be made for
the repair or maintenance of any improvements on the Leased Premises.
The Company is not in default under any agreement relating to the
Leased Premises nor is any other party thereto in default thereunder.
All options in favor of the Company to purchase any of the Leased
Premises, if any, are in full force and effect.
(qq) There are no challenges or appeals pending regarding the
amount of the taxes on, or the assessed valuation of, the Leased
Premises, and no special arrangements or agreements exist with any
governmental authority with respect thereto (the representations and
warranties contained in this paragraph (qq) shall not be deemed to be
breached by any prospective general increase in real estate tax
rates).
(rr) There are no condemnation proceedings pending or, to the
best of the Fields' and the Company's knowledge, threatened with
respect to any portion of the Leased Premises.
(ss) There is no tax assessment (in addition to the normal,
annual general real estate tax assessment) pending or, to the best of
the Fields' and the Company's knowledge, threatened with respect to
any portion of, to the extent the Company is liable for payment
therefor, the Leased Premises.
OTHER ASSETS
(tt) The furniture, fixtures, vehicles, machinery, shelving,
racks, equipment, tools, dies, molds, jigs, fixtures and other
tangible personal property (other than Inventory) owned or leased by
the Company and used in its operations (collectively, the "Equipment")
constitutes all tangible personal property necessary in order for the
Company to conduct its business as it has been conducted in the past.
All Equipment is in good operating condition and repair (ordinary wear
and tear excepted). The Disclosure Schedule contains a complete list
of all leased Equipment.
(uu) The Disclosure Schedule identifies all of the following
which are used in the Company's business and in which the Company
claims any ownership rights: (i) all trademarks, service marks,
slogans, trade names, trade dress and the like (collectively with the
associated goodwill of each, "Trademarks"), together with information
regarding all registrations and pending applications to register any
such rights; (ii) all common law Trademarks; (iii) all patents on and
pending applications to patent any technology or design; (iv) all
registrations of and applications to register copyrights; and (v) all
licenses of rights in computer software, Trademarks, patents,
copyrights, unpatented formulations, manufacturing methods and other
know-how, whether to or by the Company. The rights required to be so
identified are referred to herein collectively as the "Intellectual
Property".
(vv) (i) The Company is the owner of or duly licensed to use
each Trademark and its associated goodwill; (ii) each Trademark
registration exists and has been maintained in good standing;
(iii) each patent and application included in the Intellectual
Property exists, is owned by or licensed to the Company, and has been
maintained in good standing; (iv) each copyright registration exists
and is owned by the Company; (v) to the knowledge of the Fields, no
other firm, corporation, association or person claims the right to use
in connection with similar or closely related goods and in the same
geographic area, any mark which is identical or confusingly similar to
any of the Trademarks; (vi) neither the Company nor any of the Fields
has any knowledge of any claim that any third party asserts ownership
rights in any of the Intellectual Property; (vii) neither the Company
nor any of the Fields has any knowledge of any claim or any reason to
believe that the Company's use of any Intellectual Property infringes
any right of any third party; and (viii) neither the Company nor any
of the Fields has any knowledge or any reason to believe that any
third party is infringing any of the Company's rights in any of the
Intellectual Property.
GENERAL
(ww) Neither the Company nor any of its former or current
officers, directors, employees, agents or representatives has made,
directly or indirectly, with respect to the Company or its business
activities, any bribes or kickbacks, illegal political contributions,
payments from corporate funds not recorded on the books and records of
the Company, payments from corporate funds to governmental officials,
in their individual capacities, for the purpose of affecting their
action or the action of the government they represent, to obtain
favorable treatment in securing business or licenses or to obtain
special concessions, or illegal payments from corporate funds to
obtain or retain business. Without limiting the generality of the
foregoing, the Company has not directly or indirectly made or agreed
to make (whether or not said payment is lawful) any payment to obtain,
or with respect to, sales other than usual and regular compensation to
its employees and sales representatives with respect to such sales.
(xx) Neither the Company nor the Fields have taken any actions
which were calculated to dissuade, or had the effect of dissuading,
any present employees, representatives or agents of the Company from
continuing an association with the Company after the Closing.
(yy) Neither the Fields, nor any of their Affiliates, nor the
Company, have dealt with any person, firm or corporation who is or may
be entitled to a broker's commission, finder's fee, investment
banker's fee or similar payment for arranging the transaction
contemplated hereby or introducing the parties to each other.
(zz) The representations and warranties of the Fields in this
Agreement, and all representations, warranties and statements of the
Fields or the Company contained in any schedule, financial statement,
exhibit, list or document delivered pursuant hereto or in connection
herewith, do not omit to state a material fact necessary in order to
make the representations, warranties or statements contained herein or
therein not misleading.
(aaa) The copies of all documents furnished by the Fields or
the Company to Purchaser pursuant to or in connection with this
Agreement are complete and accurate. The Disclosure Schedule contains
complete and accurate copies of all documents referred to therein.
The information contained in the Disclosure Schedule is complete and
accurate.
(bbb) Disclosure of any fact or item in any schedule or
exhibit hereto shall be deemed to have been so disclosed in any other
schedule, exhibit, representation or warranty made by the Fields
herein, which by its terms and the matters so scheduled would be
required to be reflected therein. Matters reflected in the schedules
and exhibits hereto are not necessarily limited to matters required by
this Agreement to be disclosed herein or therein. Such additional
matters are provided for informational purposes only.
(ccc) The Fields shall not be deemed to have made to Purchaser
any representation or warranty other than as expressly made in Section
2.3 hereof. In particular, the Fields make no representations or
warranties with respect to any projections, estimates or budgets
heretofore delivered or made available to Purchaser concerning future
revenues, expenses, expenditures or results of operations.
2.4 Individual Representations and Warranties of Sellers Each
of Sellers, individually, represents and warrants to Purchaser as
follows:
(a) Such Seller has full power and authority to execute and
perform this Agreement.
(b) If such Seller is a corporation, limited partnership,
trust or entity (a "Seller Entity"), such Seller Entity is duly
organized, existing and in good standing under the laws of its
jurisdiction of incorporation or formation. The execution and
delivery of this Agreement by it and the performance by it of all of
its obligations under this Agreement have been duly approved prior to
the date of this Agreement by all requisite action of its board of
directors, general partners, trustees or the like, as the case may be.
The approval of its shareholders, limited partners, beneficiaries or
the like (as the case may be), for it to execute this Agreement or
consummate the transaction contemplated hereby is either not required
or has been duly given. This Agreement has been duly executed and
delivered by it. Neither the execution and delivery of this Agreement
by such Seller Entity, nor the consummation by it of the transaction
contemplated hereby, will conflict with or constitute a breach of any
of the terms, conditions or provisions of its Certificate or Articles
of Incorporation, by-laws, Agreement of Limited Partnership, trust
agreement or declaration of trust, or other organizational documents,
as the case may be.
(c) This Agreement has been duly executed and delivered by
such Seller, and constitutes a valid and legally binding obligation of
such Seller, enforceable against such Seller in accordance with its
terms (except to the extent that enforcement may be affected by laws
relating to bankruptcy, reorganization, insolvency and creditors'
rights and by the availability of injunctive relief, specific
performance and other equitable remedies).
ARTICLE III
RESERVED
ARTICLE IV
Conditions to Closing
4.1 Conditions to Sellers' Obligations. The obligation of
Sellers to close the transaction contemplated hereby is subject to the
fulfillment of all of the following conditions on or prior to the
Closing Date, upon the non-fulfillment of any of which, this Agreement
may, at Sellers' option, be terminated pursuant to and with the effect
set forth in Article IX:
(a) Each and every representation and warranty made by
Purchaser shall have been true and correct when made and shall be true
and correct in all material respects as if originally made on and as
of the Closing Date.
(b) All obligations of Purchaser to be performed hereunder
through, and including on, the Closing Date (including, without
limitation, all obligations which Purchaser would be required to
perform at the Closing if the transaction contemplated hereby was
consummated) shall have been performed.
(c) No suit, proceeding or investigation shall have been
commenced by any governmental authority or private person on any
grounds to restrain, enjoin or hinder, or to seek material damages on
account of, the consummation of the transaction contemplated hereby.
4.2 Conditions to Purchaser's Obligations. The obligation of
Purchaser to close the transaction contemplated hereby is subject to
the fulfillment of all of the following conditions on or prior to the
Closing Date, upon the non-fulfillment of any of which, this Agreement
may, at Purchaser's option, be terminated pursuant to and with the
effect set forth in Article IX:
(a) Each and every representation and warranty made by Sellers
shall have been true and correct when made and shall be true and
correct in all material respects as if originally made on and as of
the Closing Date.
(b) All obligations of Sellers to be performed hereunder
through, and including on, the Closing Date (including, without
limitation, all obligations which Sellers would be required to perform
at the Closing if the transaction contemplated hereby was consummated)
shall have been performed.
(c) The Company shall have obtained all consents specified by
Purchaser to the consummation of the transaction contemplated hereby
under or with respect to, any contract, lease, agreement, purchase
order, sales order or other instrument, Permit or Environmental
Permit, where the consummation of the transaction contemplated hereby
would be prohibited or constitute an event of default, or grounds for
acceleration or termination, in the absence of such consent (without
cost to Purchaser or the Company in excess of the normal and customary
cost associated therewith) or, to the extent the Permits and
Environmental Permits held by the Company would terminate upon a
change of control of the Company, Purchaser shall have either obtained
licenses and permits on substantially the same terms as such Permits
and Environmental Permits, or shall have obtained binding commitments
from the applicable governmental authorities to issue such licenses
and permits to the Company following the Closing.
(d) No suit, proceeding or investigation shall have been
commenced or threatened by any governmental authority or private
person on any grounds to restrain, enjoin or hinder, or to seek
material damages on account of, the consummation of the transaction
contemplated hereby.
(e) Sellers shall have delivered to Purchaser the written
opinion of Kummer Kaempfer Bonner & Renshaw, counsel to Sellers, dated
as of the Closing Date, in substantially the form of Exhibit D
attached hereto.
ARTICLE V
Closing
5.1 Form of Documents. At the Closing, the parties shall deliver
the documents, and shall perform the acts, which are set forth in this
Article V. All documents which Sellers shall deliver shall be in form
and substance reasonably satisfactory to Purchaser and Purchaser's
counsel. All documents which Purchaser shall deliver shall be in form
and substance reasonably satisfactory to Sellers and Sellers' counsel.
5.2 Purchaser's Deliveries. Subject to the fulfillment or waiver
of the conditions set forth in Section 4.2, Purchaser shall execute
and/or deliver to Sellers all of the following:
(a) the Shares to be paid at Closing as provided in Section
1.2;
(b) an incumbency and specimen signature certificate with
respect to the officers of Purchaser executing this Agreement, and any
other document delivered hereunder, on behalf of Purchaser;
(c) a certified copy of resolutions of Purchaser's board of
directors, authorizing the execution, delivery and performance of this
Agreement, and any other document delivered by Purchaser hereunder;
(d) a closing certificate executed by the President of
Purchaser (or any other officer of Purchaser specifically authorized
to do so), on behalf of Purchaser, pursuant to which Purchaser
represents and warrants to Sellers that Purchaser's representations
and warranties to Sellers are true and correct as of the Closing Date
as if then originally made (or, if any such representation or warranty
is untrue in any respect, specifying the respect in which the same is
untrue), that all covenants required by the terms hereof to be
performed by Purchaser on or before the Closing Date, to the extent
not waived by Sellers in writing, have been so performed (or, if any
such covenant has not been so performed, indicating that such covenant
has not been performed), and that all documents to be executed and
delivered by Purchaser at the Closing have been executed by duly
authorized officers of Purchaser; and
(e) without limitation by the specific enumeration of the
foregoing, all other documents reasonably required from Purchaser to
consummate the transaction contemplated hereby.
5.3 Sellers' Deliveries. Subject to the fulfillment or waiver of
the conditions set forth in Section 4.1, Sellers shall execute or
deliver to Purchaser all of the following:
(a) a certified copy of the Company's Articles of Organization
and Operating Agreement;
(b) certificates of good standing of the Company issued not
earlier than ten (10) days prior to the Closing Date by the Secretary
of State of Nevada and;
(c) an incumbency and specimen signature certificate with
respect to the officers of the Company executing any document
delivered by the Company hereunder or in connection with the
transaction contemplated hereby, on behalf of the Company;
(d) certificates representing all outstanding Membership
Interests, duly endorsed in blank or with duly executed stock powers
attached;
(e) a closing certificate duly executed by each Seller,
pursuant to which each Seller represents and warrants to Purchaser
that such Seller's representations and warranties to Purchaser are
true and correct as of the Closing Date as if then originally made (or
if any such representation or warranty is untrue in any respect,
specifying the respect in which the same is untrue), that all
covenants required by the terms hereof to be performed by Sellers on
or before the Closing Date, to the extent not waived by Purchaser in
writing, have been so performed (or if any such covenant has not been
so performed, indicating that such covenant has not been performed),
and that all documents to be executed and delivered by the Company at
the Closing have been executed by duly authorized officers of the
Company;
(f) the written resignations effective as of the Closing Date
of such of the managing members, directors and officers of the
Company, as are designated by Purchaser to resign;
(g) physical possession of all records, tangible assets,
licenses, policies, contracts, plans, leases or other instruments
owned by or pertaining to the Company, which are in the possession of
any Seller except to the extent that Purchaser directs that such items
should be delivered elsewhere;
(h) all necessary consents with respect to any contract,
lease, purchase order, sales order, license agreement, Permit,
Environmental Permit and license which are required as a result of a
change of control of the Company, or alternate arrangements with
respect thereto which are acceptable to Purchaser, and any other
consents obtained pursuant to the provisions of this Agreement;
(i) the minute books and records of the Company;
(j) UCC-1, Federal and State tax lien, bankruptcy and seven
(7) year judgment searches with respect to the Company, for the State
of Nevada and the counties thereof in which a portion of the business
of the Company is conducted, all prepared by search companies
reasonably satisfactory to Purchaser, and dated not earlier than
fifteen (15) days prior to the Closing Date;
(k) all clearance certificates or similar types of documents
which may be required by any state taxing authority in order to
relieve Purchaser of any obligation to withhold any portion of the
Shares; and
(l) without limitation by the specific enumeration of the
foregoing, all other documents reasonably required from Sellers to
consummate the transaction contemplated hereby.
ARTICLE VI
Post-Closing Agreements
6.1 Post-Closing Agreements From and after the Closing, the
parties shall have the respective rights and obligations which are set
forth in the remainder of this Article VI.
6.2 Inspection of Records. The Fields, Purchaser and their
respective Affiliates, shall each retain and make their respective
books and records (including expired insurance policies and work
papers in the possession of their respective accountants) with respect
to the Company available for inspection by the other party, or by its
duly accredited representatives, for reasonable business purposes at
all reasonable times during normal business hours, for a seven (7)
year period after the Closing Date, with respect to all transactions
of the Company occurring prior to and relating to the Closing, and the
historical financial condition, assets, liabilities, operations and
cash flows of the Company. As used in this Section 6.2, the right of
inspection includes the right to make extracts or copies. The
representatives of a party inspecting the records of the other party
shall be reasonably satisfactory to the other party.
6.3 Confidentiality. Sellers shall not communicate or divulge
to, or use for the benefit of, any person, firm or corporation other
than Purchaser, its agents and representatives, any Confidential
Information except as may be required by law, including filing any tax
returns.
6.4 Use of Trademarks. Sellers shall not use and shall not
license or permit any third party to use, any name, slogan, logo or
trademark which is similar, confusingly similar or deceptively similar
to any of the names or trademarks used in connection with the business
of the Company.
6.5 Back-Up. The Fields shall, at Purchaser's request, furnish
complete detailed back-up material with respect to the Company, the
past financial statements of the Company, the Financial Statements and
the Interim Financial Statements as are in Sellers' possession or are
reasonably available to Sellers.
6.6 Third Party Claims. The parties shall cooperate with each
other with respect to the defense of any claims or litigation made or
commenced by third parties subsequent to the Closing Date which are
not subject to the indemnification provisions contained in Article
VIII, provided that the party requesting cooperation shall reimburse
the other party for the other party's reasonable out-of-pocket costs
and expenses of furnishing such cooperation.
6.7 Liabilities Undertaking. Upon Closing, Purchaser hereby
undertakes, assumes and agrees to perform, pay and discharge, or cause
the Company to perform, pay and discharge the following:
(a) All unpaid debts and liabilities of the Company existing
at Closing, but only if and to the extent they are expressly set forth
or reserved against in the Financial Statements and Interim Financial
Statements or are incurred subsequent to the date of the Interim
Financial Statements and prior to the Closing in the ordinary course
of business and otherwise in conformity with the representations,
warranties and covenants of the Company with respect thereto contained
in Section 2.3 of this Agreement; and
(b) All unperformed and unfulfilled obligations which are
required to be performed and fulfilled by the Company under the terms
of all executory written contracts, agreements, leases, Permits,
commitments and undertakings as listed in the Disclosure Schedule and
were entered into prior to Closing, and which (i) are permitted by the
terms of this Agreement and (ii) in all cases, conform to the
representations, warranties and covenants of the Company with respect
thereto contained in Section 2.3.
6.8 Further Assurances. The parties shall execute such further
documents, and perform such further acts, as may be necessary to
transfer and convey the Membership Interests to Purchaser on the terms
herein contained and to otherwise comply with the terms of this
Agreement.
6.9 Injunctive Relief. Sellers specifically recognize that any
breach of Section 6.3 or 6.4 will cause irreparable injury to
Purchaser and that actual damages may be difficult to ascertain, and
in any event, may be inadequate. Accordingly (and without limiting
the availability of legal or equitable, including injunctive, remedies
under any other provisions of this Agreement), Sellers agree that in
the event of any such breach, Purchaser shall be entitled to
injunctive relief in addition to such other legal and equitable
remedies that may be available. Sellers and Purchaser recognize that
the absence of a time limitation in Section 6.3 is reasonable and
properly required for the protection of Purchaser and in the event
that the absence of such limitation is deemed to be unreasonable by a
court of competent jurisdiction, Sellers agree and submit to the
imposition of such a limitation as said court shall deem reasonable.
ARTICLE VII
Matters Regarding the Fields
7.1 Right of First Refusal
(a) The Fields may not transfer all, or any portion of their
limited liability company membership interest (the "Remaining Membership
Interest") to any person without transmitting an Offer to both the
Company and Purchaser with respect any portion thereof that the Fields
propose to transfer. "Offer" means written notice from the Fields
specifying all of the following:
(i) The Fields' intention to transfer all or any portion of
the Remaining Membership Interest;
(ii) The portion of the Remaining Membership Interest that
the Fields propose to transfer;
(iii) The name, address, and telephone number of the proposed
transferee;
(iv) The price that the transferee proposes to pay to the
Fields for the portion of the Remaining Membership Interest to be
transferred, as well as all other terms and conditions of the proposed
transfer; and
(v) The date of the Offer.
(b) Within thirty (30) days after receipt of the Offer, the
Company and/or Purchaser may purchase all, but not less than all, of the
portion of the Remaining Membership Interest proposed to be transferred.
Such purchase shall be at the same price, and under the same terms and
conditions, as the Offer.
(c) If the portion of the Remaining Membership Interest offered
by the Fields is not purchased by the Company or by the Purchaser within
the time periods specified above, the Fields may transfer the portion of
the Remaining Membership Interest to the transferee, provided, however,
that said transfer must otherwise comply with any restriction on transfer
contained in the Company's Articles of Organization and/or Operating
Agreement and that the proposed transferee agrees to sign an agreement
containing substantially the same terms as are contained in this
Agreement.
7.2 Continuing Role of the Fields. From and after the Closing Date,
the Fields shall remain as officers of the Company, and shall be charged
with the day-to-day operations of the Company. The Fields shall not
receive independent compensation for providing such services, but shall
be entitled to certain distributions from the net income of the Company
determined in accordance with generally accepted accounting principles
consistently applied, all as further detailed in an engagement letter
between the Company and the Fields in substantially the form of
Exhibit E attached hereto (the "Engagement Letter"). The Engagement
Letter shall address certain operating issues, including the
responsibilities of the Fields, the basis for the determination of the
Company's net income, events of default and other customary
provisions.
ARTICLE VIII
Indemnification
8.1 General. From and after the Closing, the parties shall
indemnify each other as provided in this Article VIII. No
specifically enumerated indemnification obligation with respect to a
particular subject matter as set forth below shall limit or affect the
applicability of a more general indemnification obligation as set
forth below with respect to the same subject matter. For the purposes
of this Article VIII, each party shall be deemed to have remade all of
its representations and warranties contained in this Agreement at the
Closing with the same effect as if originally made at the Closing.
8.2 Certain Definitions. As used in this Agreement, the
following terms shall have the indicated meanings:
(a) "Damages" shall mean all liabilities, demands, claims,
actions or causes of action, regulatory, legislative or judicial
proceedings or investigations, assessments, levies, losses, fines,
penalties, damages, costs and expenses, including, without limitation:
(i) reasonable attorneys', accountants', investigators', and experts'
fees and expenses, sustained or incurred in connection with the
defense or investigation of any such Claim; (ii) expenses (computed on
an after-Tax basis) reasonably incurred to compensate employees for
any costs or ramifications associated with compliance with (or lack of
compliance with) the requirements of section 401(a) or 401(k) of the
Code; and (iii) costs and expenses reasonably incurred to bring the
Company's assets and business into compliance with Environmental Laws;
(b) "Indemnified Party" shall mean a party hereto who is
entitled to indemnification from another party hereto pursuant to this
Article VIII;
(c) "Indemnifying Party" shall mean a party hereto who is
required to provide indemnification under this Article VIII to another
party hereto;
(d) "Third Party Claims" shall mean any claims for Damages
which are asserted or threatened by a party other than the parties
hereto, their successors and permitted assigns, against any
Indemnified Party or to which an Indemnified Party is subject.
8.3 Sellers' Indemnification Obligations. The Fields shall
jointly and severally, and the Selling Investment Members, solely with
respect to the representations and warranties contained in Section
2.4, shall severally but not jointly in accordance with their
proportionate interests reflected in Exhibit A, indemnify, save and
keep Purchaser, the Company and their respective successors and
permitted assigns (each a "Purchaser Indemnitee" and collectively the
"Purchaser Indemnitees") forever harmless against and from all Damages
sustained or incurred by any Purchaser Indemnitee, as a result of or
arising out of or by virtue of:
(a) any inaccuracy in or breach of any representation and
warranty made by Sellers to Purchaser herein or in any closing
document delivered to Purchaser in connection herewith; provided,
however, that in the case of an inaccuracy or breach of any of the
representations and warranties contained in Section 2.4, only the
Seller whose representation and warranty was inaccurate or breached
shall have an obligation of indemnification under this Section 8.3;
(b) the breach by any Seller of, or failure of any Seller to
comply with, any of the covenants or obligations under this Agreement
to be performed by Sellers (including, without limitation, their
obligations under this Article VIII);
(c) without being limited by paragraphs (a) or (b) of this
Section 8.3 (and without regard to the fact that any one or more of
the items referred to in this Section 8.3(c) may be disclosed in the
Disclosure Schedule or in any documents included or referred to
therein or may be otherwise known to Purchaser at the date of this
Agreement or on the Closing Date), any action or failure to act, in
whole or in part, on or prior to the Closing Date with respect to any
Plan, Welfare Plan or Employee Benefit Plan which the Company or any
ERISA Affiliate has at any time maintained or administered or to which
the Company or any ERISA Affiliate has at any time contributed;
(d) without being limited by paragraphs (a) or (b) of this
Section 8.3 (and without regard to the fact that any one or more of
the items referred to in this Section 8.3(d) may be disclosed in the
Disclosure Schedule or in any documents included or referred to
therein or may be otherwise known to Purchaser as the date of this
Agreement or on the Closing Date):
(i) any violation of, or delinquency in respect to, any
decree, order or arbitration award or law, statute, or regulation in
effect on or prior to the Closing Date of or agreement of the Company
with, or any license or Permit granted to the Company from, any
Federal, state or local governmental authority to which the Company or
its properties, assets, personnel or business activities are subject,
including, without limitation, laws, statutes and regulations relating
to occupational health and safety, building codes, zoning, equal
employment opportunities, fair employment practices and
discrimination;
(ii) any generation, transportation, storage, treatment
or Release of any Hazardous Materials occurring on or prior to the
Closing Date (including without limitation those that allegedly result
in, or result in, any Release or treatment of Hazardous Materials
after the Closing Date), regardless of when liability is asserted;
(iii) any discharges to or from storm, ground or surface
waters or wetlands, and any air emissions or pollution, which result
from or are caused by activities, events, conditions or occurrences on
or prior to the Closing Date;
(iv) the exposure of and resulting consequences to any
persons, including, without limitation, employees of the Company, to
any Hazardous Materials created, generated, processed, handled or
originating on or prior to the Closing Date at any location occupied
by the Company or otherwise used by the Company or its predecessors in
the conduct of its business or contained in or constituting a part of
merchandise sold by the Company or its predecessors; or
(v) any violation or alleged violation of, or obligation
imposed by, any Environmental Law as a result of activities, events,
conditions or occurrences prior to the Closing Date, regardless of
when the violation or alleged violation or obligation arises or is
asserted.
(e) (i) Notwithstanding anything in this Agreement to the
contrary, no claim for indemnification pursuant to this Section 8.3
may be made by a Purchaser Indemnitee unless such claim is made on or
prior to the day immediately preceding the first anniversary date of
the Closing.
(ii) Notwithstanding anything in this Agreement to the
contrary, if the Closing shall have occurred and a claim for
indemnification pursuant to Section 8.3(a) is made by a Purchaser
Indemnitee, then in no event shall Indemnifying Party's liability for
Damages with respect to its indemnification exceed the market value of
the Shares as of the close of trading on the last trading day
immediately prior to the Closing Date plus reasonable attorneys' fees,
expert fees and costs of collection.
(iii) Notwithstanding anything in this Agreement to the
contrary, the Indemnifying Party shall not have any obligation or
liability pursuant to this Section 8.3 to indemnify a Purchaser
Indemnitee until all Damages sustained or incurred by all Purchaser
Indemnitees exceed $100,000 in the aggregate.
(iv) The amount of any Damages for which indemnification
is provided under this Section 8.3 shall be reduced by (i) any amounts
which the Purchaser Indemnitees have recovered pursuant to any
indemnification by or indemnification agreement with any third party,
and (ii) any insurance proceeds or other cash receipts or sources of
reimbursement which the Purchaser Indemnitees have claimed and
received as an offset against such Damages. Each Purchaser Indemnitee
agrees to make any claim for indemnification from insurance proceeds
available to offset against such Damages specified in the preceding
sentence and for which it is entitled to indemnification under this
Section 8.3 and to pursue such claims in good faith.
(v) Damages subject to indemnification pursuant to this
Section 8.3 shall not include punitive damages suffered by a Purchaser
Indemnitee.
8.4 Purchaser's Indemnification Covenants. Purchaser shall
indemnify, save and keep Sellers and their respective successors and
assigns ("Seller Indemnitees"), forever harmless against and from all
Damages sustained or incurred by any Seller Indemnitee, as a result of
or arising out of or by virtue of:
(a) any inaccuracy in or breach of any representation and
warranty made by Purchaser to Sellers herein or in any closing
document delivered to Sellers in connection herewith; or
(b) any breach by Purchaser of, or failure by Purchaser to
comply with, any of the covenants or obligations under this Agreement
to be performed by Purchaser (including without limitation its
obligations under this Article VIII).
8.5 Cooperation. Subject to the provisions of Sections 8.7 and
8.8, the Indemnifying Party shall have the right, at its own expense,
to participate in the defense of any Third Party Claim, and if said
right is exercised, the parties shall cooperate in the investigation
and defense of said Third Party Claim.
8.6 Subrogation/ The Indemnifying Party shall not be entitled
to require that any action be brought against any other person before
action is brought against it hereunder by the Indemnified Party and
shall not be subrogated to any right of action until it has paid in
full or successfully defended against the Third Party Claim for which
indemnification is sought.
8.7 Third Party Claims other than Taxes. Forthwith following the
receipt of notice of a Third Party Claim, other than a Third Party
Claim with respect to Taxes, the party receiving the notice of the
Third Party Claim shall (i) notify the other party of its existence
setting forth with reasonable specificity the facts and circumstances
of which such party has received notice and (ii) if the party giving
such notice is an Indemnified Party, specifying the basis hereunder
upon which the Indemnified Party's claim for indemnification is
asserted. The Indemnified Party may, upon reasonable notice, tender
the defense of a Third Party Claim to the Indemnifying Party. If:
(a) the defense of a Third Party Claim is so tendered and
such tender is accepted without qualification by the Indemnifying
Party; or
(b) within thirty (30) days after the date on which
written notice of a Third Party Claim has been given pursuant to this
Section 8.7, the Indemnifying Party shall acknowledge without
qualification its indemnification obligations as provided in this
Article VIII in writing to the Indemnified Party;
then, except as hereinafter provided, the Indemnified Party shall not
have the right to defend or settle such Third Party Claim. The
Indemnified Party shall have the right to be represented by counsel at
its own expense in any such contest, defense, litigation or settlement
conducted by the Indemnifying Party provided that the Indemnified
Party shall be entitled to reimbursement therefor if the Indemnifying
Party shall lose its right to contest, defend, litigate and settle the
Third Party Claim as herein provided. The Indemnifying Party shall
lose its right to defend and settle the Third Party Claim if it shall
fail to diligently contest the Third Party Claim. So long as the
Indemnifying Party has not lost its right and/or obligation to defend
and settle as herein provided, the Indemnifying Party shall have the
exclusive right to contest, defend and litigate the Third Party Claim
and shall have the exclusive right, in its discretion exercised in
good faith, and upon the advice of counsel, to settle any such matter,
either before or after the initiation of litigation, at such time and
upon such terms as it deems fair and reasonable, provided that at
least ten (10) days prior to any such settlement, written notice of
its intention to settle shall be given to the Indemnified Party. All
expenses (including without limitation attorneys' fees) incurred by
the Indemnifying Party in connection with the foregoing shall be paid
by the Indemnifying Party. Notwithstanding the foregoing, in
connection with any settlement negotiated by an Indemnifying Party, no
Indemnified Party shall be required by an Indemnifying Party to (x)
enter into any settlement that does not include as an unconditional
term thereof the delivery by the claimant or plaintiff to the
Indemnified Party of a release from all liability in respect of such
claim or litigation, (y) enter into any settlement that attributes by
its terms liability to the Indemnified Party or (z) consent to the
entry of any judgment that does not include as a term thereof a full
dismissal of the litigation or proceeding with prejudice. No failure
by an Indemnifying Party to acknowledge in writing its indemnification
obligations under this Article VIII shall relieve it of such
obligations to the extent they exist. If an Indemnified Party is
entitled to indemnification against a Third Party Claim, and the
Indemnifying Party fails to accept the defense of a Third Party Claim
tendered pursuant to this Section 8.7, or if, in accordance with the
foregoing, the Indemnifying Party shall lose its right to contest,
defend, litigate and settle such a Third Party Claim, the Indemnified
Party shall have the right, without prejudice to its right of
indemnification hereunder, in its discretion exercised in good faith
and upon the advice of counsel, to contest, defend and litigate such
Third Party Claim, and may settle such Third Party Claim, either
before or after the initiation of litigation, at such time and upon
such terms as the Indemnified Party deems fair and reasonable,
provided that at least ten (10) days prior to any such settlement,
written notice of its intention to settle is given to the Indemnifying
Party. If, pursuant to this Section 8.7, the Indemnified Party so
defends or (except as hereinafter provided) settles a Third Party
Claim, for which it is entitled to indemnification hereunder, as
hereinabove provided, the Indemnified Party shall be reimbursed by the
Indemnifying Party for the reasonable attorneys' fees and other
expenses of defending the Third Party Claim which is incurred from
time to time, forthwith following the presentation to the Indemnifying
Party of itemized bills for said attorneys' fees and other expenses.
8.8 Claims Involving Taxes In the case of any proposed or actual
assessment of Tax liabilities for which Purchaser is entitled to
indemnification from the Fields as provided herein, Purchaser shall
give notice to the Fields, and shall cause the Company to contest such
proposed or actual assessment in the manner directed by the Fields (in
consultation with Purchaser) through the administrative review or
appeal procedures available under the relevant Tax laws and
regulations. If the pursuit of such administrative remedies by the
Company is unsuccessful, Purchaser shall be entitled to cause the
Company to pay the Tax (and any penalties and interest) and be
entitled to indemnification from the Fields; provided, however, that
if within ten (10) days of receipt from Purchaser of notice of its
intention to do so, the Fields shall notify Purchaser of their desire
to contest the proposed or assessed Tax deficiency in the courts, they
shall be entitled to do so at the Fields' expense provided the Fields
pay (subject to their entitlement to a refund if their efforts are
successful) the deficiency and any penalties and interest if required
in order to seek judicial relief. Purchaser shall cause the Company
to cooperate with the Fields for such purposes but shall be entitled
to reimbursement for any out-of-pocket expenses incurred by Purchaser
or the Company in doing so.
8.9 Characterization of Indemnity Payments Purchaser and
Sellers agree to treat any payment made by Sellers hereunder to
Purchaser as an adjustment to the Shares. However, in the event the
Internal Revenue Service determines that any such payment constitutes
taxable gain or income to Purchaser or the Company, such payment shall
be increased so that the payee receives, on an after-Tax basis, the
amount which would have been received had the payment not resulted in
taxable gain or income.
ARTICLE IX
RESERVED
ARTICLE X
Provisions Governing Shares
10.1 Restrictions; Registration. Sellers acknowledge and agree
that the Shares issued under Section 1.2 hereof will not be registered
under federal securities laws, nor any rules or regulations of the
United States Securities and Exchange Commission. Accordingly,
transfer or other disposition of the Shares is restricted under
applicable securities laws, rules and regulations. At Closing,
Purchaser shall enter into a Registration Rights Agreement with
Sellers, in the form of Exhibit F attached hereto, pursuant to which
Seller shall be granted "piggyback" registration rights only, subject
to certain conditions therein contained.
ARTICLE XI
Miscellaneous
11.1 Expenses; Transfer Taxes. Each party hereto shall bear all
fees and expenses incurred by such party in connection with, relating
to or arising out of the negotiation, preparation, execution, delivery
and performance of this Agreement and the consummation of the
transaction contemplated hereby, including, without limitation,
attorneys', accountants' and other professional fees and expenses.
11.2 Publicity. Except as otherwise required by law or
applicable stock exchange rules, press releases concerning this
transaction shall be made only with the prior agreement of the Fields
and Purchaser.
11.3 Notices All notices required or permitted to be given
hereunder shall be in writing and may be delivered by hand, by
facsimile, by nationally recognized private courier, or by United
States mail. Notices delivered by mail shall be deemed given three
(3) business days after being deposited in the United States mail,
postage prepaid, registered or certified mail. Notices delivered by
hand by facsimile, or by nationally recognized private carrier shall
be deemed given on the first business day following receipt; provided,
however, that a notice delivered by facsimile shall only be effective
if such notice is also delivered by hand, or deposited in the United
States mail, postage prepaid, registered or certified mail, on or
before two (2) business days after its delivery by facsimile. All
notices shall be addressed as follows:
If to Sellers:
c/o Philip and June Field
Poker Digest, LLC
1455 East Tropicana, Suite 300
Las Vegas, NV 89119
Fax: (702) 740-2257
If to Purchaser:
Casino Journal Publishing Group, Inc.
Bayport One, Suite 470
8025 Black Horse Pike
West Atlantic City, New Jersey 08232
Attention: Alan Woinski, President
Fax: (609) 645-1661
with a copy to:
William J. Downey, Esquire
Sterns & Weinroth, A Professional Corporation
2901 Atlantic Avenue
Atlantic City, New Jersey 08401
Fax: (609) 340-8722
and/or to such other respective addresses and/or addressees as may be
designated by notice given in accordance with the provisions of this
Section 11.3.
11.4 Entire Agreement. This Agreement and the instruments to be
delivered by the parties pursuant to the provisions hereof constitute
the entire agreement between the parties and shall be binding upon and
inure to the benefit of the parties hereto and their respective legal
representatives, successors and permitted assigns. Each Exhibit,
Schedule and the Disclosure Schedule, shall be considered incorporated
into this Agreement. Any amendments, or alternative or supplementary
provisions to this Agreement must be made in writing and duly executed
by an authorized representative or agent of each of the parties
hereto.
11.5 Non-Waiver. The failure in any one or more instances of a
party to insist upon performance of any of the terms, covenants or
conditions of this Agreement, to exercise any right or privilege in
this Agreement conferred, or the waiver by said party of any breach of
any of the terms, covenants or conditions of this Agreement, shall not
be construed as a subsequent waiver of any such terms, covenants,
conditions, rights or privileges, but the same shall continue and
remain in full force and effect as if no such forbearance or waiver
had occurred. No waiver shall be effective unless it is in writing
and signed by an authorized representative of the waiving party. A
breach of any representation, warranty or covenant shall not be
affected by the fact that a more general or more specific
representation, warranty or covenant was not also breached.
11.6 Counterparts This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, and all
such counterparts shall constitute but one instrument.
11.7 Severability. The invalidity of any provision of this
Agreement or portion of a provision shall not affect the validity of
any other provision of this Agreement or the remaining portion of the
applicable provision.
11.8 Applicable Law. This Agreement shall be governed and
controlled as to validity, enforcement, interpretation, construction,
effect and in all other respects by the internal laws of the State of
New Jersey applicable to contracts made in that State.
11.9 Binding Effect; Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, and their
successors and permitted assigns. Nothing in this Agreement, express
or implied, is intended to confer on any person other than the parties
hereto, and their respective successors and permitted assigns any
rights, remedies, obligations or liabilities under or by reason of
this Agreement.
11.10 Assignability. This Agreement shall not be assignable by
either party without the prior written consent of the other party,
which consent shall not be unreasonably withheld, except that at or
prior to the Closing, Purchaser may assign its rights and delegate its
duties under this Agreement to a subsidiary corporation and may assign
its rights under this Agreement to its lenders for collateral security
purposes.
11.11 Amendments. This Agreement shall not be modified or
amended except pursuant to an instrument in writing executed and
delivered on behalf of each of the parties hereto.
11.12 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not affect the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
ATTEST: CASINO JOURNAL PUBLISHING GROUP, INC.
By:_______________________________________
Alan Woinski, President
SELLERS:
WITNESS:
_____________________________________
Philip Field
______________________________
June Field
______________________________
Terrell H. Amers
______________________________
Marc Beren
______________________________
Ann Berg
______________________________
Gregory A. Chapin
______________________________
Leo Chu
______________________________
Ivy Chu
______________________________
Lorelei B. Cole
______________________________
Edwin Corson
______________________________
Barbara Corson
______________________________
William Fahey
______________________________
Hap Field
______________________________
Wyonne V. Balfe
______________________________
Steven Friedman
______________________________
Pete Kretzmer
______________________________
Millicent Kretzmer
______________________________
Alan Krigman
Icon Information Concepts, Inc.
______________________________
______________________________
Dennis R. Leaf
______________________________
William Lewis
______________________________
Mary Lewis
______________________________
Richard P. Mills
______________________________
Bonita J. Mills
______________________________
John C. Palmer
______________________________
Dennis Querrey
______________________________
Julia Querrey
______________________________
Charles Tarr, Jr.
______________________________
John Tibbetts
______________________________
Eugene Trimble
______________________________
Carol Trimble
______________________________
Linda White
______________________________
Ronald L. Woodhill, as Trustee
______________________________
Barbara J. Woodhill, as Trustee
EXHIBIT A
Selling Investment Members
Terrell H. Amers 2%
Marc Beren 2%
Ann Berg 2%
Gregory A. Chapin 2%
Leo & Ivy Chu 2%
Lorelei B. Cole 2%
Edwin & Barbara Corson 1%
William Fahey 1%
Hap Field 1%
Wyonne V. Balfe 2%
Philip and June Field 16%
Steven Friedman 1%
Pete & Millicent Kretzmer 2%
Alan Krigman 1%
Icon Information Concepts, Inc. 1%
Dennis R. Leaf 2%
William & Mary Lewis 3%
Richard P. & Bonita J. Mills 1%
John C. Palmer 1%
Dennis and/or Julia Querrey 1%
Charles Tarr, Jr. 5%
John Tibbetts 2%
Eugene & Carol Trimble 1%
Linda White 4%
Ronald L. & Barbara J. Woodhill, as Trustees 2%
EXHIBIT B
Allocation of Shares
CJPG Share Allocation
Terrell H. Amers 10,050
Marc Beren 10,050
Ann Berg 10,050
Gregory A. Chapin 10,050
Leo & Ivy Chu 10,050
Lorelei B. Cole 10,050
Edwin & Barbara Corson 5,025
William Fahey 5,025
Hap Field 5,025
Wyonne V. Balfe 10,050
Philip and June Field 80,400
Steven Friedman 5,025
Pete & Millicent Kretzmer 10,050
Alan Krigman 5,025
Icon Information Concepts, Inc. 5,025
Dennis R. Leaf 10,050
William & Mary Lewis 15,075
Richard P. & Bonita J. Mills 5,025
John C. Palmer 5,025
Dennis and/or Julia Querrey 5,025
Charles Tarr, Jr. 25,125
John Tibbetts 10,050
Eugene & Carol Trimble 5,025
Linda White 20,100
Ronald L. & Barbara J. Woodhill,
as Trustees 10,050
EXHIBIT C
ASSIGNMENT
THIS ASSIGNMENT is made this 1st day of July, 2000, by --------------,
an individual ("Assignor"), to CASINO JOURNAL PUBLISHING GROUP, INC.,
a Nevada corporation, its assignee or nominee ("Assignee").
BACKGROUND
On even date herewith, Assignor and Assignee have executed that
certain Membership Interest Purchase Agreement (the "Agreement"),
pursuant to which Agreement Assignor has agreed to transfer all of its
right, title and interest in and to Poker Digest, LLC, a Nevada
limited liability company (the "LLC") to Assignee.
NOW, THEREFORE, in consideration of the foregoing, the promises
contained herein, the shares in Assignee to be issued pursuant to the
Agreement, and other good and valuable consideration, the receipt and
legal sufficiency of which is hereby acknowledged, Assignor hereto,
intending to be legally bound hereby, agrees as follows:
Assignor does hereby grant, sell, assign, convey, transfer, set over
and deliver to Assignee, all of Assignor's right, title and interest
in and to the LLC, including the entirety of Assignor's limited
liability company membership interest in the LLC.
TO HAVE AND TO HOLD unto Assignee, its successors and assigns,
forever.
IN WITNESS WHEREOF, Assignor has executed this Assignment on the date
first above written.
WITNESS:
EXHIBIT E
CASINO JOURNAL PUBLISHING GROUP, INC.
Bayport One, Suite 470
8025 Black Horse Pike
West Atlantic City, New Jersey 08232
July 1, 2000
Philip Field and June Field
Poker Digest, LLC
1455 East Tropicana, Suite 300
Las Vegas, NV 89119
Dear Mr. and Mrs. Field:
On even date herewith, Philip and June Field (sometimes collectively
referred to as the "Fields") and certain third parties sold and
assigned to Casino Journal Publishing Group, Inc. ("CJPG") sixty
percent (60%) of the limited liability company membership interests in
Poker Digest, LLC (the "Company") pursuant to the terms of that
certain Membership Interest Purchase Agreement (the "Purchase
Agreement") by and among the Fields, certain third parties and CJPG.
As contemplated by Section 7.2 of the Purchase Agreement, this
engagement letter will serve to outline the terms and conditions upon
which the Fields will render services to the Company on a continuing
basis. All measures of revenue and expense referenced in this
engagement letter will be determined in accordance with generally
accepted accounting principles (GAAP) consistently applied unless
otherwise specifically provided herein.
1. Resignation and Appointment of Managers. Upon consummation of
the transactions contemplated by the Purchase Agreement, Philip Field
shall resign as Manager of the Company. Such resignation shall be
effective immediately upon the execution and delivery of this engagement
letter by each of the Fields. Simultaneously with the delivery of such
resignation, the Company shall appoint Glenn Fine as Manager of the
Company to serve in such position in accordance with the terms of the
Operating Agreement governing the affairs of the Company.
2. Appointment as Officers. Effective immediately upon the
resignation of Philip Field as Manager of the Company and the appointment
of Glenn Fine as Manager of the Company, CJPG shall cause the Company to
appoint June Field as its Chief Executive Officer and to appoint Philip
Field as its Chief Operating Officer. CJPG will take no action to cause
the Company to remove the Fields as officers of the Company except as
provided in Paragraph 6 of this engagement letter.
3. Duties of Office.
As Chief Executive Officer of the Company, June Field shall be
responsible for those tasks reasonably assigned by CJPG in relation to
the conduct of the business of the Company and such other tasks and
responsibilities as are typically assumed and performed by chief
executive officers of similarly situated companies. June Field shall
report directly to and be subject to supervision by CJPG's Chief
Executive Officer.
As Chief Operating Officer of the Company, Philip Field shall be
responsible for those tasks reasonably assigned by CJPG in relation to
the conduct of the business of the Company and such other tasks and
responsibilities as are typically assumed and performed by chief
operating officers of similarly situated companies. Philip Field shall
report directly to and be subject to supervision by CJPG's Chief
Executive Officer.
(c) While officers of the Company, the Fields shall perform their
services from an office in Las Vegas, Nevada metropolitan area and at
such other offices of CJPG as may be reasonably required by their
duties; provided, however, that the Fields shall not be required to
move their home from Clark County, Nevada.
4. Operational Issues. The bulk of the operations of the Company
will continue from their current location.
(a) Upon closing of the transaction, CJPG's accounting staff in
Atlantic City, New Jersey will assume all Company accounting
functions, including the billing, payroll, accounts receivable and
accounts payable of the Company. Commencing January 1, 2001, a
portion of CJPG's accounting expense will be charged to the Company.
The amount of the expense charged to the Company shall be determined
by multiplying the gross amount of all CJPG accounting expenses by a
fraction, the numerator of which is the gross revenue derived from the
operations of the Company (as defined for purposes of determining
quarterly distributions of the Company's net income) and the
denominator of which is the gross revenue derived from all CJPG
operations.
(b) The CJPG marketing, sales and production staff will cooperate
with and be available to assist the Company in the Company's conduct
of business.
(c) Commissions shall be paid to the Company's sales staff by the
Company on terms consistent with CJPG's commission structure.
Currently, no member of CJPG's sales staff is commissioned at a rate
higher than fifteen percent (15%) of sales.
(d) CJPG's marketing staff will work with the Fields to use their
expertise to attempt to increase circulation and ad sales and continue
the current growth of the Company. The Company shall receive a
"commission credit" to its revenues for each new advertising account
opened by the Fields. The amount of and terms on which such
commissions shall be earned shall be consistent with those provided by
CJPG to its sales staff. CJPG shall be reimbursed by the Company on a
cost basis for the use of CJPG's materials (such as videos,
directories, etc.) in subscription generating promotions. If, for
example, the Company offers one of CJPG's video poker video tapes to
all new subscribers to the Company's Poker Digest Magazine, the
Company will reimburse CJPG for the actual cost to CJPG of each tape
provided. The cross marketing of all CJPG and Company publications
and events will be done on an inter-company barter basis.
(e) The operations of the Company's Classic Poker Cruises may be
merged into CJPG's Gaming Entertainment Expositions unit. All revenue
derived from the operations of Classic Poker Cruises will be credited
to the Company regardless of which subsidiary or division of CJPG is
responsible for actual operations, and the Fields shall remain
involved in all aspects of such operations.
(f) All principally poker-oriented activities, events, programs,
productions, etc., conducted by CJPG shall be deemed to be a component
of Classic Poker Cruises operations; provided, however, that no
revenues derived from any publication of CJPG or any CJPG subsidiary
or affiliate (other than the Company) or any retail sales of CJPG or
any CJPG subsidiary or affiliate (other than the Company) shall be
credited to the Company.
(g) The Company's current retail division, including the sale of
books, videos, etc., will be merged into CJPG's Dealers Choice Gift
Shop. All revenue derived from the sale of any items from the Dealers
Choice Gift Shop sold through the Company's efforts will be credited
to the Company, regardless of which subsidiary or division of CJPG is
responsible for actual sales and distribution.
5. Distribution of Net Income. The net income, if any, derived
from the operations of the Company ("Net Income") will be distributed
between CJPG and the Fields in proportion to their respective
ownership interests in the Company. For purposes of this engagement
letter, the operations of the Company will include the publication of
Poker Digest Magazine, the operation of Classic Poker Cruises and the
operation of the Company's retail division, after taking into
consideration any of those operational changes contemplated in
Paragraph 4, above, which have been implemented. Distributions of Net
Income will be made at such time as the Managers of the Company shall
determine after consultation with the auditors of the Company. If
such distributions of Net Income are made prior to the completion of
CJPG's annual audit, then such distributions will, as necessary, be
adjusted based on the results of such audit. Each such audit shall
include an audit of the financial statements of the Company, and a
copy of such audited financial statements shall promptly be provided
to the Fields.
Notwithstanding the foregoing, for so long as the Fields remain as
officers of the Company, they will receive a guaranteed minimum
distribution of $10,000 per quarter (net) (the "GMD"), which sum will
be considered a draw against distributions of Net Income. If, for
instance, the Fields own forty percent (40%) of the outstanding
interest in the Company and the Company's operations generate $90,000
in Net Income for any fiscal year, the Fields will receive $40,000 for
the year (GMD x 4). If the Fields own forty percent (40%) of the
outstanding interest in the Company and the Company's operations
generate $200,000 in Net Income for any fiscal year, the Fields will
receive $80,000 in payments. Distributions of the GMD will be made
within five (5) business days of the close of each quarter. The
Fields' right to receive the GMD will terminate at such time as the
Fields resign or are otherwise removed as officers of the Company. If
only one of the Fields remains as an officer of the Company, the GMD
will be reduced to $5,000 per quarter (net).
6. Termination of Officers. CJPG may cause the Company to remove
either of the Fields as officers of the Company under the following
circumstances:
(a) death or disability (where disability shall mean the subject
individual's inability, for a period of one hundred eighty (180) days
in any twelve (12) month period, to render substantially the services
provided for in Paragraph 3 by reason of mental or physical
disability, whether resulting from illness, accident or otherwise);
(b) conviction of a crime involving moral turpitude;
(c) use of alcohol or any unlawful controlled substance to an extent
that it interferes on a continuing and material basis with the
performance of the services provided for in Paragraph 3;
(d) engaging in the willful, unauthorized disclosure of Confidential
Information (as defined in Paragraph 7) concerning the Company or
CJPG, unless such disclosure was required by an order of a court
having jurisdiction over the subject matter or a summons, subpoena or
order in the nature thereof of any legislative body or any
governmental or administrative agency;
(e) performing services for any other corporation or person that
competes with the Company or CJPG, other than in the course of
properly carrying out his or her duties under this engagement letter;
or
(f) in carrying out his or her duties under this engagement letter,
engaging in willful neglect or willful misconduct resulting, or
reasonably likely to result, in either case, in material economic harm
to the Company, unless such act, or failure to act, resulted from the
individual's reasonable belief that such act or failure to act was in
the best interests of the Company.
7. Covenant Not to Compete; Covenants to Protect Confidential
Information; Hiring Away Employees.
(a) If either of the Fields voluntarily resigns as an officer
of the Company, or is removed by the Company in accordance with
Paragraph 6, such individual shall not for the lesser of one (1) year
after being so removed engage in competition with the Company within
the meaning of Paragraph 7(b). If either of the Fields is in breach
of this Paragraph 7(a), since a remedy at law will not suffice to
remedy the damage suffered thereby, the Company shall be entitled to
specific performance.
(b) The Fields shall be engaging in competition with the
Company if they (or either of them) are engaged in (i) the poker-
related publishing business within the primary geographic market area
of any location in which the Company is engaging in the gaming-related
publishing business at the time of the removal of such individual,
whether as an employee, consultant, partner, principal, agent,
representative or stockholder or in any other corporate or
representative capacity or (ii) the solicitation of any customer of
the Company which has been a customer of the Company or CJPG within
the past one (1) year, to purchase from any source other than the
Company or CJPG any product or service which could be supplied by the
Company or CJPG. The foregoing restrictions shall not be construed to
prohibit the ownership by the Fields of less than five percent (5%) of
any class of securities of any corporation which is engaged in any of
the foregoing business having a class of securities registered
pursuant to the Securities Exchange Act of 1934, provided that such
ownership represents a passive investment and that neither the Fields
nor any group of persons including the Fields in any way, either
directly or indirectly, manages or exercises control of any such
corporation, guarantees any of its financial obligations, or otherwise
takes any part in its business, other than exercising their rights as
a shareholder, or seeks to do any of the foregoing.
(c) The Fields shall not, while officers of the Company or
thereafter, without the prior written consent of the Company, divulge,
publish or otherwise disclose to any other person any Confidential
Information regarding the Company, CJPG or any subsidiary of either of
them, except in the course of carrying out their responsibilities on
behalf of the Company (e.g., providing information to the Company's
attorneys, accountants, bankers, etc.) or if required to do so
pursuant to the order of a court having jurisdiction over the subject
matter or a summons, subpoena or order in the nature thereof of any
legislative body or any governmental or administrative agency. For
this purpose, Confidential Information shall include, but not be
limited to, the Company's and CJPG's financial, advertising, marketing
and promotional plans and strategies and customer and advertiser
lists. Confidential Information does not include information that
becomes available to the public other than through a breach of this
covenant on the part of the Fields.
(d) For a period of one (1) year after resignation or removal
from office, the Fields shall not take any actions which are
calculated to persuade any salaried, technical or professional
employees, representatives (including sales representatives) or agents
of the Company to terminate their association with the Company.
8. Equitable Relief.
(a) The Fields acknowledge and agree that the restrictions
contained in Paragraph 7 are reasonable and necessary to protect and
preserve the legitimate interests, properties, goodwill and business
of the Company, that the CJPG would not have entered into this
engagement letter in the absence of such restrictions and that
irreparable injury will be suffered by the Company and by CJPG should
the Fields breach any of the provisions of that Paragraph. The Fields
represent and acknowledge that (i) they have been advised by CJPG to
consult their own legal counsel in respect of this engagement letter,
and (ii) that they have had full opportunity, prior to execution of
this engagement letter, to review thoroughly this engagement letter
with their counsel.
(b) The Fields further acknowledge and agree that a breach of
any of the restrictions in Paragraph 7 cannot be adequately
compensated by monetary damages. The Fields agree that the Company
and/or CJPG shall be entitled to preliminary and permanent injunctive
relief, without the necessity of proving actual damages, as well as an
equitable accounting of all earnings, profits and other benefits
arising from any violation of Paragraph 7, which rights shall be
cumulative and in addition to any other rights or remedies to which
the Company or CJPG may be entitled. In the event that any of the
provisions of this Paragraph should ever be adjudicated to exceed the
time, geographic, service, or other limitations permitted by
applicable law in any jurisdiction, it is the intention of the parties
that the provision shall be amended to the extent of the maximum time,
geographic, service, or other limitations permitted by applicable law,
that such amendment shall apply only within the jurisdiction of the
court that made such adjudication and that the provision otherwise be
enforced to the maximum extend permitted by law.
(c) The Fields irrevocably and unconditionally (i) agree that
any suit, action or other legal proceeding arising out of Paragraph 7,
including without limitation, any action commenced by the Company or
CJPG for preliminary and permanent injunctive relief and other
equitable relief, may be brought in the United States District Court
for the District of Nevada, or if such court does not have
jurisdiction or will not accept jurisdiction, in any court of general
jurisdiction in Nevada, (ii) consent to the non-exclusive jurisdiction
of any such court in any such suit, action or proceeding, and (iii)
waive any objection which they may have to the laying of venue of any
such suit, action or proceeding in any such court.
9. Assignability; Binding Nature. This engagement letter shall
be binding upon and inure to the benefit of the parties and their
respective successors, heirs and assigns. No rights or obligations
under this engagement letter may be assigned or transferred by the
Fields, the Company or CJPG except that the rights or obligations of
the Company and/or CJPG may be assigned or transferred pursuant to a
merger or consolidation in which the Company and/or CJPG is not the
continuing entity, or the sale or liquidation of all or substantially
all of the assets of the Company and/or CJPG, provided that the
assignee or transferee is the successor to all or substantially all of
the assets of the Company and/or CJPG and such assignee or transferee
assumes the liabilities, obligations and duties of the Company and/or
CJPG, as contained in this engagement letter, either contractually or
as a matter of law.
10. Entire Agreement; Amendment of Operating Agreement. This
engagement letter contains the entire agreement between the parties
concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with
respect thereto. The parties agree to vote their respective interests
in the Company in support of any amendments or modifications to the
Operating Agreement currently governing the affairs of the Company
that are necessary or desirable to further effectuate the provisions
of this engagement letter.
11. Amendment or Waiver. The terms of this engagement letter
cannot be changed, modified or amended without the consent in writing
of both the Fields and CJPG. No waiver by any party at any time of
any breach by any other party of any condition or provision of this
engagement letter shall be deemed a waiver of a similar or dissimilar
condition or provision at the same or at any prior or subsequent time.
Any waiver must be in writing and signed by all parties hereto.
12. Severability. In the event that any provision or portion of
this engagement letter shall be determined to be invalid or
unenforceable for any reason, in whole or in part, the remaining
provisions of this engagement letter shall be unaffected thereby and
shall remain in full force and effect to the fullest extent permitted
by law.
13. Governing Law. This engagement letter shall be governed by
and construed and interpreted in accordance with the laws of the State
of Nevada without reference to principles of conflict of laws.
14. Headings. The headings of the paragraphs contained in this
engagement letter are for convenience of reference only, do not
constitute a part of this engagement letter and shall not be deemed to
limit or affect any of the provisions hereof.
15. Counterparts. This engagement letter may be executed in two
or more counterparts.
If the terms of this engagement letter accurately reflect the terms
upon which you have agreed to continue to serve the Company, please
acknowledge your agreement by executing this engagement letter where
indicated and returning a fully executed copy to my attention. Thank
you.
Very truly yours,
CASINO JOURNAL PUBLISHING GROUP, INC.
By:_______________________________________
Alan Woinski, President
Acknowledged and Agreed:
___________________________
June Field
___________________________
Philip Field
Poker Digest, LLC has executed this document to acknowledge its rights
and obligations hereunder, and its agreement to bound hereby.
POKER DIGEST, LLC
BY:_________________________
EXHIBIT F
REGISTRATION RIGHTS AGREEMENT
CASINO JOURNAL PUBLISHING GROUP, INC.
Bayport One, Suite 470
8025 Black Horse Pike
West Atlantic City, New Jersey 08232
July 1, 2000
Philip Fields and June Fields
Dear Sirs/Mesdames:
This will confirm the rights of Philip and June Fields and the Selling
Investment Members (as that term is defined in the Agreement (as
hereinafter defined)) ("you") to have shares registered under the
Securities Act under the Membership Interest Purchase Agreement of
even date between our corporation ("CJPG") and you (the "Agreement"),
and certain other matters.
1. Certain Definitions. As used herein, the following terms
shall have the following respective meanings:
"Registration Expenses" means the expenses so described in
Section 6.
"Restricted Stock" means shares of Common Stock of CJPG issued
to you on even date herewith, the certificates for which are required
to bear the legend set forth in Section 2, excluding shares which may
at the time be sold pursuant to Rule 144 under the Securities Act or
which may be otherwise sold without registration under the Securities
Act.
"Securities Act" means the Securities Act of 1933 or any similar
Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" means the expenses so described in Section 6.
2. Restrictive Legend. Each Certificate representing shares
issued to you on even date herewith and, except as otherwise provided
in Section 3, each certificate issued upon exchange or registration of
transfer of any such shares shall be stamped or otherwise imprinted
with a legend substantially in the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "1933 ACT") OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT
BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED
UNDER THE 1933 ACT AND SUCH LAWS OR AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
3. Notice of Proposed Transfer. Prior to any proposed transfer
of any Restricted Stock (other than under the circumstances described
in Section 4 and 5), the holder thereof shall give written notice to
CJPG of such holder's intention to effect such transfer. Each such
notice shall describe the manner and circumstances of the proposed
transfer and, if requested by CJPG, shall be accompanied by an opinion
of the stockholder's counsel reasonably satisfactory to CJPG to the
effect that the proposed transfer may be effected without registration
under the Securities Act, whereupon the holder of such Restricted
Stock shall be entitled to transfer such Restricted Stock in
accordance with the terms of its notice if such opinion of counsel is
reasonably satisfactory in form and substance to counsel for CJPG.
Each certificate approved for transfer as above provided shall bear
the legend set forth in Section 2, except that such certificate shall
not bear such legend if (i) such transfer is made, in the opinion of
CJPG's counsel, pursuant to an effective registration statement or in
accordance with the provisions of Rule 144 (or any other statutory
provisions or rule permitting public sale without registration under
the Securities Act) or (ii) the opinion of counsel which is reasonably
satisfactory in form and substance to CJPG's counsel is to the further
effect that the transferee and any subsequent transferee (other than
an affiliate of CJPG) would be entitled to transfer such securities in
a public sale without registration under the Securities Act.
4. Limitation on Registration Rights. CJPG shall not be
required to register under the Securities Act all or any portion of
the shares of Restricted Stock, except as required in Section 5
hereof. Notwithstanding anything contained in Section 5 hereof, CJPG
shall not be obligated to register shares of Restricted Stock
hereunder to the extent such shares are salable pursuant to Rule 144
under the Securities Act. The obligations of CJPG to register shares
of Restricted Stock hereunder shall terminate on the date on which
such shares may be sold pursuant to Rule 144(K) under the Securities
Act. Notwithstanding anything herein to the contrary, and not in
limitation of any of CJPG's other rights hereunder, CJPG's obligations
to file a registration statement, or cause such registration statement
to become and remain effective, shall be suspended for a period not to
exceed 90 days if, in the reasonable and good faith opinion of CJPG,
such registration or the sale of shares of Restricted Stock pursuant
to such registration would not be in the best interest of CJPG.
5. Incidental Registration. If CJPG at any time proposes to
register any of its securities, which are of the same type and class
as the Restricted Stock, under the Securities Act for sale to the
public, whether for its own account or for the account of other
security holders or both (except with respect to registration
statements on Forms S-8, S-4 or another form not available for
registering the Restricted Stock for sale to the public), each such
time it will give written notice to all holders of outstanding
Restricted Stock of its intention so to do. Upon the written request
of any such holder, given within 20 days after receipt of any such
notice, to register any of its Restricted Stock (which request shall
state the intended method of disposition thereof), CJPG will use
reasonable efforts to cause the Restricted Stock as to which
registration shall have been so requested to be included in the
securities to be covered by the registration statement proposed to be
filed by CJPG. Alternatively, CJPG may, in its sole discretion, file
a separate registration statement covering the Restricted Stock as to
which registration shall have been requested. In the event that any
registration pursuant to this Section 5 shall be, in whole or in part,
an underwritten public offering of Common Stock, the Restricted Stock
to be registered must be sold through the underwriters and the number
of shares of Restricted Stock to be included in such an underwriting
may be reduced if and to the extent that the managing underwriter
shall be of the opinion that such inclusion would adversely affect the
marketing of the securities to be sold, and the shares selected to be
sold shall be selected in the following order of priority: First,
primary financings by CJPG and shares of persons who have right to
initiate a registration statement; then to persons who have "piggyback
rights" including, without limitation, rights generally comparable to
those set forth in this Section 5 hereof, pursuant to agreements
entered into prior to the date hereof; then to the holders of
Restricted Stock; then to all other persons who have acquired such
"piggyback" rights pursuant to agreements entered into after the date
hereof. If the total number of shares of Restricted Stock requested
to be registered after such reduction shall still be in excess of the
number of shares recommended to be registered by the underwriters, the
number of shares registered, if any, by each person in the last
priority, including a holder of Restricted Stock if such holders are
in the last priority whose shares are to be registered, shall be
reduced pro rata according to the number of shares requested by each
such holder to registered. Notwithstanding the foregoing provisions,
CJPG may withdraw any registration statement referred to in this
Section 5 without thereby incurring any liability to the holders of
Restricted Stock, and may terminate any offering after the
registration statement becomes effective at any time at CJPG's sole
discretion.
6. Registration Procedures and Expenses. If and whenever CJPG is
required by the provisions of Section 5 to offer incidental
registration rights to the holders of Restricted Stock, and such offer
is accepted by any such holder in accordance with the requirements of
this Agreement, CJPG will:
(a) furnish to each seller and to each underwriter such number
of copies of the registration statement and the prospectus included
therein (including each preliminary prospectus) as such persons
reasonably may request in order to facilitate the public sale or other
disposition of the Restricted Stock covered by such registration
statement;
(b) use its good faith efforts to register or qualify the
Restricted Stock covered by such registration statement under the
securities or blue sky laws of such jurisdictions as the sellers of
Restricted Stock or the managing underwriter reasonably shall request;
provided, however, that CJPG shall not for any such purpose be
required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to
consent to general service of process or taxation in any such
jurisdiction;
(c) immediately notify each seller of Restricted Stock under
such registration statement and each underwriter, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event of which CJPG has
knowledge as a result of which the prospectus contained in such
registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then
existing; upon receipt of such notice, the holder of registered shares
will discontinue any sales of registered stock; upon giving of such
notice CJPG will file such amendments or supplements to the
registration statement promptly to eliminate such misstatement or
omission and will advise the holder of the registered shares that it
has done so, whereupon the holder may recommence its sale of
registered stock; and
(d) make available for inspection by each seller, any
underwriter participating in any distribution pursuant to such
registration statement, and any attorney, accountant or other agent
retained by such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of CJPG, and
cause CJPG's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration
statement.
In connection with each registration hereunder, the selling
holders of Restricted Stock will furnish to CJPG in writing such
information with respect to themselves and the proposed distribution
by them as reasonably shall be necessary in order to assure compliance
with federal and applicable state securities laws.
CJPG and each seller of Restricted Stock agree to enter into a
written agreement with any managing underwriter selected in the manner
herein provided in such form and containing such provisions as are
reasonably satisfactory to CJPG and such seller of Restricted Stock
and as are customary in the securities business for such an
arrangement between such underwriter, such seller and companies of
CJPG's size and investment stature.
CJPG will give the selling holders of Restricted Stock two days'
advance notice of its anticipated filing date of the registration
statement and amendments thereto.
7. Expenses. All expenses incurred by CJPG in complying with
Section 5 hereof, including without limitation all registration and
filing fees, printing expense, fees and disbursements of counsel and
independent public accountants for CJPG, fees and expenses (including
counsel fees) incurred in connection with complying with state
securities or "blue sky" laws (other than those which by law must be
paid by the selling security holders), fees of the National
Association of Securities Dealers, Inc., fees of transfer agents and
registrars, but excluding any Selling Expenses, are called
"Registration Expenses." All underwriting discounts, selling
commissions and transfer taxes applicable to the sale of outstanding
shares and any legal fees and expenses of counsel or other advisers
and agents of the holders of outstanding shares of Restricted Stock
being registered are called "Selling Expenses."
CJPG will pay all Registration Expenses. All Selling Expenses shall
be borne by the participating sellers, in proportion to the number of
shares sold by each unless they otherwise agree among themselves.
8. Indemnification.
(a) In the event of a registration of any of the Restricted
Stock under the Securities Act pursuant hereto, CJPG will indemnify
and hold harmless each seller of such Restricted Stock thereunder and
each other person, if any, who controls such seller within the meaning
of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such seller or controlling
person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any
registration statement under which such Restricted Stock was
registered under the Securities Act, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
and will reimburse each such seller and each such controlling person
for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that CJPG will not be
liable in any such case if and to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission
so made in conformity with information furnished by any such seller or
any such controlling person in writing specifically for use in such
registration statement or prospectus.
(b) In the event of a registration of any of the Restricted
Stock under the Securities Act pursuant hereto, each seller of such
Restricted Stock thereunder, jointly, severally and in the
alternative, will indemnify and hold harmless CJPG and each person, if
any, who controls CJPG within the meaning of the Securities Act, each
officer of CJPG who signs the registration statement, each director of
CJPG, each underwriter and each person who controls any underwriter
within the meaning of the Securities Act, against all losses, claims,
damages or liabilities, joint or several, to which CJPG or such
officer or director or underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement
under which such Restricted Stock was registered under the Securities
Act pursuant hereto, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, or arise
out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse CJPG
and each such officer, director, underwriter and controlling person
for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim,
damage, liability or action, provided, however, that such seller will
be liable hereunder in any such case if and only to the extent that
any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with
information pertaining to such seller, as such, furnished in writing
to CJPG by such seller specifically for use in such registration
statement or prospectus.
(c) Promptly after receipt by an indemnified party hereunder
of notice of the commencement of any action, such indemnified party,
if a claim in respect thereof is to be made against the indemnifying
party hereunder, will notify the indemnifying party in writing
thereof, but the omission so to notify the indemnifying party shall
not relieve it from any liability that it may have to any indemnified
party under this Section 8. In case any such action shall be brought
against any indemnified party, the indemnified party shall notify the
indemnifying party of the commencement thereof and the indemnifying
party shall be entitled to participate in and, to the extent it shall
wish, to assume and undertake the defense thereof with counsel
reasonably satisfactory to such indemnified party. After notice from
the indemnifying party to such indemnified party of its election so to
assume and undertake the defense thereof, the indemnifying party shall
not be liable to such indemnified party under this Section 8 for any
legal expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected; provided,
however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be reasonable defenses
available to it that are different from or additional to those
available to the indemnifying party or if the interests of the
indemnified party reasonably may be deemed to conflict with the
interests of the indemnifying party, the indemnified party shall have
the right to select a separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action,
with the expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the indemnifying
party as incurred.
(d) No indemnifying party shall be liable for any amounts paid
in a settlement of any claim effected without the consent of the
indemnifying party, which consent shall not be withheld unreasonably.
(e) No indemnifying party, in the defense of any such claim or
litigation, shall, except with the consent of each indemnified party,
consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.
9. Miscellaneous.
(a) All covenants and agreements contained in this Agreement
by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties
hereto whether so expressed or not. Without limiting the generality
of the foregoing, the registration rights conferred herein on the
holders of Restricted Stock shall inure to the benefit of any and all
proper subsequent holders from time to time of the Restricted Stock.
(b) All notices, requests, consents and other communications
hereunder shall be in writing and shall be mailed by first class
registered mail, postage prepaid, addressed as follows:
if to the CJPG, to it at its office at:
Casino Journal Publishing Group, Inc.
Bayport One, Suite 470
8025 Black Horse Pike
West Atlantic City, New Jersey 08232
Attention: Alan Woinski, President
Fax: (609) 645-1661;
if to you, at the address stated in this letter;
if to a subsequent holder of Restricted Stock, to it at such address
as may have been furnished to CJPG in writing by such holder;
or, in any case, at such other address or addresses as shall have been
furnished in writing to CJPG (in your case or other holder of
Restricted Stock) or to the holders of Restricted Stock or you (in the
case of CJPG).
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey.
(d) This Agreement may not be amended or modified, and no
provision hereof may be waived, without the written consent of the
holders of at least a majority in interest of the outstanding shares
of Restricted Stock treated as a single class.
(e) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(f) Notwithstanding anything herein to the contrary, CJPG
shall not be obligated to include any Restricted Stock in a
registration statement unless the stock has been issued to the person
requesting registration prior to the time the registration statement
is initially filed with the Commission. CJPG will use reasonable
efforts to advise the person requesting registration of the
anticipated filing and effective dates of the registration statement.
(g) Notwithstanding anything herein to the contrary, the
holder of any Restricted Stock will delay any registered or other
sales of Restricted Stock to the extent reasonably required by the
managing underwriter of any underwritten sale of CJPG Common Stock,
for a period of up to 90 days. No Restricted Stock may be transferred
except to a person who undertakes, by a written instrument
satisfactory in form and substance to CJPG, to be bound by this
Agreement.
(h) Rule 144 Reporting. With a view to making available to
you the benefits of certain rules and regulations of the SEC which may
permit the sale of the Restricted Stock to the public without
registration, CJPG agrees when required by law:
(i) To make and keep public information available, as
those terms are understood and defined in SEC Rule 144, at all times;
(ii) To use its best efforts to file with the SEC in a
timely manner all reports and other documents required of CJPG under
the Securities Act and the Securities Exchange Act of 1934;
(iii) So long as you own any Restricted Stock, to furnish
you forthwith upon request a written statement by CJPG as to its
compliance with the reporting requirements of Rule 144 and of the
Securities Act and the Securities Exchange Act of 1934; a copy of the
most recent annual or quarterly report of CJPG; and such other reports
and documents so filed by CJPG as you may reasonably request in
availing yourself of any rule or regulation of the SEC allowing you to
sell any such securities without registration.
(i) Conflict. In the event of any conflict between the terms
of this Agreement and the Membership Interest Purchase Agreement, the
terms of this Agreement shall control.
(j) Transfer of Registration Rights. You shall not transfer,
convey, pledge or assign your rights under this Agreement (the
"Registration Rights"), nor any portion thereof or rights therein,
under any circumstances except with the prior written consent of CJPG,
which consent shall not be unreasonably withheld, or as specifically
permitted under this Subsection 9(j). Upon delivery of prior written
notice to CJPG, you may transfer, convey, pledge or assign the
Registration Rights to any member of the immediate family (i.e.,
parent, spouse, child or grandchild) of any of you, or to a trust for
the benefit of any such member of the immediate family of any of you.
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this letter, whereupon this
Agreement shall be a binding agreement between CJPG and you.
Very truly yours,
ATTEST: CASINO JOURNAL PUBLISHING GROUP, INC.
______________________________
By:_______________________________________
Alan Woinski, President
AGREED TO AND ACCEPTED
as of the date first above written.
_________________________
Philip Field
_________________________
June Field
___________________________________
Terrell H. Amers
___________________________________
Marc Beren
___________________________________
Ann Berg
___________________________________
Gregory A. Chapin
___________________________________
Leo Chu
___________________________________
Ivy Chu
___________________________________
Lorelei B. Cole
___________________________________
Edwin Corson
___________________________________
Barbara Corson
___________________________________
William Fahey
___________________________________
Hap Field
___________________________________
Wyonne V. Balfe
___________________________________
Steven Friedman
___________________________________
Pete Kretzmer
___________________________________
Millicent Kretzmer
___________________________________
Alan Krigman
Icon Information Concepts, Inc.
By:_________________________________
____________________________________
Dennis R. Leaf
____________________________________
William Lewis
____________________________________
Mary Lewis
____________________________________
Richard P. Mills
____________________________________
Bonita J. Mills
___________________________________
John C. Palmer
___________________________________
Dennis Querrey
___________________________________
Julia Querrey
___________________________________
Charles Tarr, Jr.
___________________________________
John Tibbetts
___________________________________
Eugene Trimble
___________________________________
Carol Trimble
___________________________________
Linda White
___________________________________
Ronald L. Woodhill, as Trustee
___________________________________
Barbara J. Woodhill, as Trustee
